What happened: Snowflake shares (SNOW) jumped 38% pre-market on Thursday after the cloud data company posted better-than-expected quarterly results, driven by accelerating enterprise AI demand for its platform and an expanded deal with Amazon Web Services.

Shares of peer ServiceNow (NOW) also jumped, along with the broader Tech-Software ETF (IGV).

What’s behind the move: Snowflake said AI products contributed to the “strongest sequential product revenue dollar growth” in its history. Fiscal first quarter revenue growth of 33% year over year to $1.39 billion.

The company announced an expanded collaboration with AWS through a new multi-year, $6 billion agreement aimed at accelerating global enterprise AI adoption. It also deepened its partnership with OpenAI.

What else do you need to know: WedBush Securities analyst Dan Ives reiterated an Outperform rating on Snowflake stock while raising his share price target from $270 to $280.

“We continue to believe the software landscape is in the early innings of AI monetization as the disconnect induced by the ‘AI Ghost Trade’ closes for SNOW,” wrote Ives in a client note following the quarterly results.

The broader Software ETF (IGV) has rebounded 24% since mid-April as investors have grown more bullish on companies viewed as direct beneficiaries of artificial intelligence-driven productivity gains. Software firms have been aggressively promoting the integration of generative AI tools into their platforms.

The recent rally marks a sharp reversal from earlier this year when software stocks came under pressure amid fears that artificial intelligence could disrupt traditional software business models.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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