The Morning Download: Snowflake Rides Enterprise Data Avalanche

Good morning. It is often said that AI models are only as good as the data that feeds them. Snowflake is benefiting from that relationship, providing a platform where companies can aggregate data from a range of sources and get it in shape for AI.

Shares of the company were sharply higher in pre-market trading this morning after it reported Wednesday that fiscal first-quarter profits beat expectations. The company raised its full-year product revenue forecast as well.

The Wall Street Journal reported yesterday that Snowflake plans to pay $6 billion over the next five years for access to Amazon’s Graviton chips inside AWS data centers. For the quarter that ended on April 30, Snowflake said, revenue grew 33% to $1.39 billion, beating Wall Street expectations of $1.3 billion in sales.

As Barron’s notes, Snowflake shares were down 20% this year through Wednesday’s close, while the S&P 5oo index was up 10%. That reflects the deep uncertainty that many investors have over the impact of AI on software. It will take time for the market to assess that relationship, but in the meantime, corporate investment in data infrastructure tied to AI is soaring. More on that below.

An index tracking major U.S.-traded semiconductor-related companies is rising thanks to investors' enthusiasm for the core technology powering artificial intelligence, the Journal reports.

The PHLX Semiconductor Index has advanced 82% so far this year, its strongest start to a year in its first 100 trading days. 

The semiconductor index now trades well above its 50-day moving average. The index is also trading significantly higher above its 200-day moving average.

Behind the rally lies the ongoing global memory chip shortage, but also surging demand for all major chip segments, from Intel's CPUs to Nvidia's GPUs, essential to operating AI.

That’s the thesis that fueled Jomaa’s investment in the startup LangChain, which makes an open-source framework for building AI applications. Rather than following the traditional software development lifecycle, or SDLC, LangChain has dubbed this new AI-driven process the “agent development lifecycle,” or ADLC.

In the ADLC, enterprise developers are building agents that require access to existing IT systems, prompts and tools to execute certain tasks, and context and memory.

Essentially, products like LangChain make up the “picks and shovels” around building agents that companies increasingly need to get started with the technology, Jomaa said.

And while enterprises tend to be slower to adopt new technologies than consumers, they’ve now embraced AI agents, Jomaa told me. Some are even encountering the problem of too many agents.

How did they get there? Jomaa says it’s a combination of dramatic improvements in AI models, the “harness” around agents getting better, and OpenClaw helping to popularize the idea of the independent agent.

“The enterprise is starting to realize, ‘This stuff actually works,’” he said.

— Belle Lin

• Salesforce on Wednesday recorded higher profit and sales in the first quarter with adjusted EPS beating expectations. Shares were down 2.8% in premarket trading on Thursday, Barron's reports.

• Meta Platforms in an internal memo announced a new organization called Enterprise Solutions to bring its AI tools to business customers. The unit will include forward-deployed engineers. The memo, reviewed by the Information, did not specify which products or services the unit will prioritize.

• IBM and Red Hat are investing $5 billion to create a centralized repository for open-source software to strengthen enterprise software supply chains, the WSJ reports. "Open source is the backbone of today's digital economy and the foundation of modern AI, and we are at an inflection point in how it is built, secured and scaled," IBM Chief Executive Arvind Krishna said. IBM acquired Red Hat in 2019. The initiative, dubbed Project Lightwell, will leverage AI to identify, test, and remediate security vulnerabilities and will deploy a global network of 20,000 engineers.

• Google software engineer Michele Spagnuolo, 36, was charged with fraud and money laundering over bets he allegedly made on Polymarket last year that were based on nonpublic search data Google restricts to “only a limited number of employees,” according to a criminal complaint filed by the Manhattan U.S. attorney’s office and unsealed Wednesday.

• Debates over the data center buildout are spreading across the developing world where the power grid infrastructure is often more fragile, water more scarce and as a result the stakes for the local populace are much higher. The WSJ reports that U.S. tech firms have faced some of the fiercest responses in India, where data-center capacity is forecast to grow fivefold to roughly 10 gigawatts over roughly the next five years, according to Morgan Stanley.

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Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute's new Executive Resilience series, where she's profiling America's top execs about their fitness and wellness habits.

Follow Belle Lin on LinkedIn and X for her latest reporting on enterprise technology and AI.

Steven Rosenbush is chief of the enterprise technology bureau at the WSJ Leadership Institute. He also has a column. You can follow him on LinkedIn.

Tom Loftus is the editor of The Morning Download. He suggests following Isabelle, Belle and Steve on their various social channels. But if you insist, here's his LinkedIn.