Snowflake (SNOW +6.83%) is expanding its partnership with Amazon (AMZN 1.23%), specifically Amazon Web Services (AWS), in a collaboration aimed at accelerating AI capabilities among enterprise customers. The news of the multiyear deal sent Snowflake's shares soaring more than 35%. Here's what investors need to understand about the partnership.
NYSE: SNOW
Key Data Points
The agreement aims to help enterprise customers fully leverage AI for reasoning and workflows, thereby improving business results and productivity. Snowflake is pledging to spend $6 billion on AWS over five years. This investment dramatically increases Snowflake's use of Amazon's Graviton CPUs and Trainium GPUs.
The commitment to spend this much money indicates strong demand for Snowflake, which fully expects to see a multiple on its investment. Snowflake's first quarter of 2026 was a solid one, with a 33% year-over-year increase in revenue and more than $9 billion in remaining performance obligations.
Image source: The Motley Fool.
Investors should understand that while $6 billion will be leaving Snowflake in the coming years, it's a strategic bet based on real demand. Snowflake reported that it has 779 customers with trailing-12-month product revenue exceeding $1 million and more than 800 Forbes Global 2000 customers. Snowflake's partnership with Amazon is a confident step toward further growth.
The biggest risk is if AI adoption among major clients stalls due to either high costs or a lack of business results. This risk is not unique to Snowflake, but a challenge across all companies aggressively adopting agentic AI.
The stock is trading at a premium right now, particularly after the spike in share price. Investors should take a long-term view, particularly given that the announced deal spans five years. There will be plenty of room for growth if Snowflake can help its customers adopt AI effectively and efficiently.
