Updated 10:04 am EDT
Snowflake (SNOW) -) shares slipped in early trading after the company posted better-than-expected fiscal-second-quarter earnings, powered in part by AI-linked demand for its cloud-based data storage and management tools.
Snowflake, with a data cloud business including customers such as asset manager BlackRock (BLK) -), financial-data provider FactSet (FDS) -) and real-estate-data provider Zillow (ZG) -), posted adjusted earnings of 22 cents a share compared with a penny a share in the year-earlier quarter.
For the quarter ended July 31, revenue of $674 million was better than Wall Street expected and a 36% increase from a year earlier.
The Bozeman, Mont., tech group also said it expected current-quarter revenue in the region of $670 million to $675 million.
Snowflake is leveraging a partnership it unveiled earlier this spring with Nvidia (NVDA) -), the market leader in AI chipmaking, to help a range of companies use their proprietary data to build and store AI models.
"Snowflake as the global epicenter of trusted enterprise data is well positioned to enable the growing interest in AI/ML," said Chief Executive Frank Slootman. "Enterprises and institutions alike are increasingly aware they cannot have an AI strategy without a data strategy.”
"We now have a presence with 639 Global 2000 customers. AI reaches beyond enterprise boundaries," he added. "Models need external data to answer challenging questions. Data sharing makes Snowflake uniquely positioned to enable AI workloads."
Snowflake shares had been higher in premarket trading but at last check were trading off 0.4% at $155.02.
"While Snowflake’s challenges include shifting consumption dynamics, the macroeconomic impact on bookings, the shortages of GPUs from Nvidia to train large language models, and competition from Databricks for data scientists' attention, we continue to like this story," said JMP Securities analyst Patrick Walravens. He carries an outperform rating with a $200 price target on Snowflake stock.
"Snowflake has seven new products coming to market that should drive consumption and revenue within the next year that should further address the needs of data scientists," he added.
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