Snowflake’s AI Bet Pays Off With Strong Earnings, But Wall Street Demands More

The latest report from Snowflake Inc. has analysts and investors buzzing, showcasing the classic Silicon Valley dynamic: strong growth that still manages to disappoint the most demanding corners of Wall Street. The cloud data powerhouse, trading under the ticker SNOW, recently unveiled its fiscal third-quarter results for 2026, delivering a decisive beat on both revenue and earnings per share (EPS).

For the quarter ending October 31, 2025, Snowflake reported a total revenue of $1.21 billion, which represents a healthy 29% year-over-year jump and sailed past the analyst consensus of $1.18 billion. On the profitability front, the company posted an adjusted EPS of $0.35, comfortably beating the $0.31 expectation. These figures demonstrate that the company’s underlying business remains robust, driven largely by its core product revenue, which grew 29% year over year to $1.16 billion.

Digging into the numbers, there are clear signs of customer loyalty and expansion. The Net Revenue Retention Rate, a key metric tracking how much existing customers spend, held steady at an impressive 125%. Furthermore, the number of clients spending over $1 million annually with Snowflake grew to 688, indicating its platform is deeply embedded in the operations of major enterprises. Its Remaining Performance Obligations, essentially a backlog of contracted future revenue, grew 37% year-over-year to $7.88 billion.

The AI Data Cloud Strategy Takes Center Stage

So, with all the solid news, why did the stock initially take a hit? The answer, as is often the case with high-growth tech stocks, comes down to the subtle signals in the growth trajectory. Investors focused on the deceleration of product revenue growth, which slowed slightly to 29% compared to the prior quarter, and the company’s Q4 guidance. Management projected product revenue for the fourth quarter to be between $1.195 billion and $1.2 billion, which implies a 27% growth rate, suggesting a continued, albeit slight, slowdown in the growth pace.

CEO Sridhar Ramaswamy, who took the helm in early 2024, is actively working to reshape the narrative by focusing the company’s mission on the “AI Data Cloud.” Ramaswamy’s core message is clear: “There is no AI strategy without a data strategy,” and Snowflake aims to be the indispensable foundation for that transition. This pivot is already translating into real business, with the company announcing that AI influenced half of its new bookings during the quarter, and it hit an internal goal of a $100 million AI revenue run rate one quarter early.

The company is doubling down on key initiatives like *Snowflake Intelligence*, an enterprise AI agent, and strategic partnerships with tech leaders like NVIDIA and SAP to integrate its platform deeper into the enterprise ecosystem. Despite the market’s knee-jerk reaction to the guidance, analysts generally maintain a favorable outlook, with a consensus rating of “Moderate Buy” and multiple recent price targets above the current trading level, signaling confidence in the long-term vision of a data cloud platform powered by AI.