Snowflake signs $6 billion deal with AWS tied to AI infrastructure
Snowflake Inc. (NYSE: SNOW) announced on Wednesday, May 27, a significant five-year agreement with Amazon Web Services (AWS), valued at $6 billion. This substantial investment is specifically tied to AWS' advanced Graviton processors and its broader AI chip infrastructure, signaling a deepening partnership between the two technology companies.
The core objective of this agreement is to facilitate Snowflake's extensive utilization of AWS' custom-designed Graviton central processing units (CPUs) and specialized AI accelerators. This strategic collaboration is designed to streamline the process of integrating Snowflake customer data with the expanding ecosystem of artificial intelligence services that are built and hosted atop AWS' robust cloud infrastructure.
Under the specific terms of the five-year deal, Snowflake plans to leverage a hybrid approach for its generative AI (GenAI) models and services. This involves running and training these advanced AI applications using a combination of graphics processing units (GPUs) operating within the AWS environment, alongside Amazon's Graviton CPU cores. Snowflake has maintained a long-standing relationship with AWS, having established its data cloud platform on Amazon's servers since 2011. In recent years, the company has progressively transitioned a growing portion of its compute operations from traditional Intel and AMD CPUs to Amazon's proprietary Arm-based Graviton instances, reflecting a strategic shift in its underlying infrastructure.
Snowflake CEO Sridhar Ramaswamy provided insight into the strategic rationale behind the deal, stating, "We are making it easier for enterprises to bring AI directly to governed data, so they can move faster, operate with greater density and create measurable impact at scale." This highlights the company's focus on enabling businesses to securely and efficiently integrate AI capabilities with their existing data assets.
The announcement of the AWS deal coincided with Snowflake's upward revision of its financial outlook. The company raised its annual product revenue forecast for fiscal year 2027 to $5.84 billion, an increase from its previously projected $5.66 billion. Furthermore, Snowflake anticipates its second-quarter product revenue to fall within the range of $1.415 billion to $1.420 billion. This projection notably surpasses the average analyst estimate of $1.37 billion, according to data compiled by LSEG.
These upwardly revised forecasts underscore a growing trend of increased enterprise spending on artificial intelligence applications. They also reflect a continued shift of substantial data workloads to Snowflake's specialized cloud platform, indicating strong demand for its services. In response to these developments, Snowflake's shares experienced a significant surge of 36% in extended trading, reflecting investor confidence in the company's strategic direction and growth prospects.