Accelerating product revenue and a raised outlook suggest enterprise AI projects are becoming real workloads rather than experiments.

Snowflake shares rose roughly 21% after second-quarter results exceeded expectations and management lifted its full-year product-revenue forecast. Total revenue reached $1.55 billion, up 35%, while product revenue increased 37% to $1.49 billion.

The company posted its third consecutive quarter of accelerating product-revenue growth. Remaining performance obligations reached $9 billion, up 30%, and net revenue retention was 126%. Those figures indicate that existing customers are expanding usage while future contracted demand remains healthy.

Management said AI products accounted for approximately half of the growth acceleration. That matters because Snowflake charges largely according to usage. New AI features are valuable only when they cause customers to store, process and analyze more data on the platform. The quarter suggests that conversion has begun.

A sharp rally raises the bar again. Consumption can fluctuate when customers optimize workloads, and Snowflake still competes with hyperscale cloud vendors and Databricks. Investors should monitor product revenue, retention and large-customer growth rather than relying on AI announcements alone.

Snowflake’s report offered unusually direct evidence that AI demand is flowing into a core software platform. The next challenge is sustaining that acceleration while improving margins. Today’s rally is justified by stronger fundamentals, but future gains will require AI usage—not just interest—to keep compounding.