Key Stats for Snowflake Stock
- Pre-market Price Change for Snowflake stock: -8%
- $SNOW Share Price as of Dec. 3 $265
- 52-Week High: $281
- $SNOW Stock Price Target: $274
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What Happened?
Snowflake (SNOW) stock plunged nearly 8% in premarket trading on Thursday despite beating Wall Street expectations on both revenue and earnings.
The data cloud company reported fiscal third-quarter product revenue of $1.16 billion, up 29% year-over-year and above the $1.13 billion analysts expected. Adjusted earnings came in at $0.35 per share, crushing the $0.31 consensus.
So why is Snowflake stock down? Investors zeroed in on the deceleration in growth. Product revenue growth slowed from 32% last quarter to 29% this quarter. For a high-growth software company trading at premium valuations, even small drops in growth rates can trigger sharp selloffs.
Snowflake’s Q4 guidance also disappointed some investors, given that management expects product revenue between $1.195 billion and $1.2 billion, implying 27% growth. While that roughly matches analyst estimates, it represents another step down from the current quarter’s 29% pace.
During the earnings call, CEO Sridhar Ramaswamy emphasized the company’s consumption-based model and noted that large customer migrations can be “lumpy and not all that easy to predict.”
CFO Brian Robins, who recently joined the company, stressed that investors should focus on the full-year guidance rather than quarterly variability.
Snowflake added a record 615 new customers, bringing the total to over 12,600. It signed four 9-figure deals, a quarterly record, while net revenue retention held steady at a healthy 125%, indicating existing customers continue to expand their usage.
The company announced it reached $100 million in AI revenue run rate one quarter ahead of schedule. Over 7,300 accounts are now using Snowflake’s AI capabilities weekly, and 1,200 customers have adopted Snowflake Intelligence, the company’s agentic AI platform.
Ramaswamy highlighted several customer wins, including Morgan Stanley naming Snowflake its Strategic Partner of the Year.
Companies like Fanatics, TS Imagine, and even the USA Bobsled/Skeleton team are using Snowflake Intelligence to turn natural language queries into actionable insights.
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What the Market Is Telling Us About Snowflake Stock
The harsh reaction to Snowflake stock shows how demanding investors have become with high-growth software names. A 29% growth rate and 125% net retention would be excellent numbers for most companies, but Snowflake has trained the market to expect more.
The selloff reflects broader concerns about whether cloud data platforms can maintain their premium growth rates as they scale.
Snowflake’s remaining performance obligations (RPO) of $7.88 billion grew 37% year-over-year, accelerating from prior quarters. This suggests the slowdown in product revenue growth may be more about the timing of consumption than weakening demand.
CFO Brian Robins, who’s been at Snowflake for about 60 days, emphasized that quarterly beats in a consumption model aren’t the best indicator of business health.
He pointed to the full-year guidance raise of $51 million to $4.446 billion as the more meaningful signal. That implies 28% growth for fiscal 2026.
During the call, Ramaswamy explained that AI is influencing about 50% of new bookings and 28% of all use cases deployed in the quarter incorporated AI. This demonstrates that AI isn’t just a separate product line but is driving adoption across Snowflake’s entire platform.
Snowflake also announced a major partnership expansion with Anthropic, committing $200 million to bring Claude AI models natively into Snowflake across all three major cloud providers.
This move positions Snowflake as a central hub where enterprises can run AI workloads on their own data without moving information to external systems.
Several analysts on the call pressed for details on consumption patterns and migration timing. Ramaswamy noted that large migrations are still in the early innings, with AWS’s Matt Garman recently estimating that the industry is only 15% to 20% through on-premises-to-cloud migrations.
Looking ahead, Snowflake stock faces a challenging comparison as growth rates normalize. The company trades at a premium valuation, and investors are clearly scrutinizing every data point for signs of further deceleration.
However, the acceleration in RPO growth, record customer additions, and the $100 million AI run rate suggest the underlying business remains healthy.
The key question for investors is whether Snowflake can reaccelerate growth as AI adoption scales. The company is making significant investments in products such as Snowflake Intelligence and OpenFlow for data ingestion, as well as in partnerships with major AI providers.
If these bets pay off and enterprises standardize on Snowflake as their AI data platform, the current selloff could represent a buying opportunity.
Investors should monitor whether the company can sustain its net retention rate above 120%, maintain RPO growth in the mid-30% range, and demonstrate that AI revenue is becoming a more material contributor to overall growth.
The consumption model makes quarterly results inherently variable, so focusing on the annual trajectory may provide clearer insight into Snowflake’s long-term potential.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
