The AI trade moves up the stack

For a year, AI money meant processors, data centers and cloud capacity. Snowflake's September 2 results gave the first clean evidence that AI spending is reaching software companies sitting close to the end customer.

A raised target, not just a beat

Second-quarter product revenue jumped 37% to $1.49 billion, and Snowflake lifted its fiscal 2027 product revenue target to $6.07 billion from $5.84 billion.

AI is lifting the core platform

CEO Sridhar Ramaswamy said AI products drove about half the growth acceleration. Analysts read that as AI pulling more consumption into the main data platform, not just selling bolt-on add-ons.

The whole sector caught it

ServiceNow, Atlassian, Adobe, Intuit and Salesforce all rose 3.5% to 6% the next morning. The iShares Expanded Tech-Software ETF gained 3%.

Salesforce got there first

On August 26 Salesforce posted $11.35 billion in revenue, up 11%, with current remaining performance obligations up 14% to $33.5 billion and adjusted EPS of $5.90 against a $3.27 consensus.

Read the Salesforce number twice

A $2.61 billion net gain on strategic investments added $2.53 per share to that EPS. The Claudeforce partnership with Anthropic, 37 prebuilt sales skills inside Claude, is barely rolled out.

Sustainability is the real test

Watch Cortex Code and CoWork account growth at Snowflake, and Agentforce ARR and cRPO at Salesforce. The next two quarters decide whether this was a turning point or a breather.

“whether this was a turning point for enterprise software or simply a welcome, if temporary, respite from a difficult year”