Growing AI demand drives solid Snowflake earnings and revenue beat – News

Big data company Snowflake Inc. provided a bullish forecast for its fiscal 2027 product revenue today, saying it’s benefiting from booming enterprise demand for artificial intelligence tools, which drives more customers to its data analytics platform.

In its fourth-quarter results, the company delivered adjusted earnings of 32 cents per share, easily beating Wall Street’s target of 27 cents. Revenue for the period rose by an impressive 30% from a year earlier to $1.28 billion, also surpassing the analyst consensus of $1.26 billion.

Snowflake said its product revenue in the quarter came to $1.23 billion, also up 30% and ahead of the $1.2 billion analyst target.

Snowflake Chief Executive Sridhar Ramaswamy (pictured) said the past year has been transformative for the company as the promise of AI has started to become a reality for its customers. “Snowflake sits at the center of the enterprise AI revolution,” he insisted. “For over a decade, we’ve built the foundation that makes AI safe and scalable — a single source of truth, cross-cloud interoperability and enterprise-grade governance. Now, we’re activating world-class agentic capabilities on top of that platform.”

The company sells a cloud-based data warehouse platform that companies use to store and integrate all of their data in one place. Doing so makes it easier to leverage that data for business insights, train AI tools and solve crucial operational problems.

More recently, the company has expanded into agentic AI. In November, it announced the launch of its new Snowflake Intelligence platform, which introduces conversational capabilities to its data warehouse, so customers can ask questions of their data and receive answers without specialized skills. Ramaswamy told analysts on a conference call that Snowflake Intelligence is already being used by more than 2,500 enterprises.

“We also signed the largest deal in our history of over $400 million,” Ramaswamy said, though he declined to name the customer concerned.

Broader SaaS fallout weighs on Snowflake

While many believe Snowflake is well-positioned to benefit from the continued growth of AI and the emergence of autonomous AI agents, its stock has still been swept up by the broader fears about the future of the software industry. In the year to date, its shares have declined 22%, and even its reasonably upbeat guidance wasn’t enough to turn the tide, as they fell just over 2% in late trading today.

The company said it’s looking for first-quarter product revenue of between $1.262 billion and $1.267 billion, which would represent growth of about 27% – a slowdown from the 30% growth in the quarter just done. That said, its forecast still came in ahead of Wall Street’s projection, which calls for $1.255 billion in annual product revenue.

For the full year, Snowflake also calls for 27% product revenue growth, though it’s worth pointing out that the company historically tends to beat its annual forecast by about 3% on average. That implies that it could actually match the 29% product revenue growth rate it saw in fiscal 2026.

The company also said it’s projecting an operating margin of 9% in the first quarter, down from 11% in the previous quarter. Wall Street is looking for an operating margin of 9.5%. It should get better though. For the full year, Snowflake sees operating margin at around 12.5%, ahead of the Street’s consensus of 11.1%.

Snowflake Chief Financial Officer Brian Robins said the company has a strategy for “durable growth” that’s focused on “landing new customers and expanding them into strategic, long-term relationships. As we look ahead, our focus remains on driving stability and operational rigor to support sustained, long-term growth.”

Investors may be encouraged by some recent developments. During the quarter, Snowflake announced a $200 million, multiyear partnership with OpenAI Group PBC to bring enterprise-grade generative artificial intelligence models directly into its data platform. The agreement deepens a relationship that until now had largely flowed through Microsoft Corp.’s Azure ecosystem. Under the agreement, OpenAI’s models will be natively available inside Snowflake Cortex AI managed service and Snowflake Intelligence, giving Snowflake’s 12,600 customers the ability to build and deploy AI applications and agents directly on governed enterprise data across all three major public clouds.

Meanwhile, Snowflake is also looking to enhance its observability capabilities. Last month, it bought a startup called Observe AI Inc. in a deal that was reportedly valued at around $1 billion. The company said the acquisition will help it to advance its AI data cloud strategy by integrating AI-native observability tools into its platform, helping customers to solve headaches caused by the massive volumes of telemetry data generated by AI applications.

Analyst Brian White of Monness, Crespi, Hardt & Co. told MarketWatch that Snowflake has been an unlucky victim of investor’s fears that AI could disrupt the broader software industry. While there is merit to some of the concerns about AI agents, he said they’re not justified in the case of Snowflake, which remains “well-positioned” to benefit.

Photo: Robert Hof/ News