Snowflake's stock dips as the software company gives a mixed outlook

By Hannah Pedone

In a market where investors have been quick to punish software stocks, Snowflake's report doesn't offer enough to excite Wall Street

Analysts see opportunities for Snowflake to win in AI.

Snowflake's stock has been swept up this year by broader investor fears about the future of the software industry, and even reasonably upbeat revenue guidance Wednesday doesn't seem like enough to change the mood.

Shares of Snowflake (SNOW) declined 2% in extended trading Wednesday, after the data-warehousing software company reported mixed quarterly earnings.

The company expects $1.262 billion to $1.267 billion in product revenue for the fiscal first quarter, which would translate to 27% growth from a year before. That would mark a slowdown from the 30% growth rate seen in the fiscal fourth quarter, though the forecasted revenue total exceeded the $1.255 billion that analysts were modeling.

Snowflake's full-year growth forecast also calls for 27%, but Evercore ISI's Kirk Materne noted that the company has a tendency to beat its forecast by about 3 percentage points. That implies the company could actually see full-year growth accelerate from the 29% rate seen in fiscal 2026, he said.

For the first quarter of fiscal 2027, the company expects adjusted operating margins of 9%, down from 11% in the fiscal fourth quarter. The FactSet consensus was calling for 9.5% in the fiscal first quarter and 7.4% in the fiscal fourth quarter.

The company expects adjusted operating margins of 12.5% for all of fiscal 2027, ahead of the FactSet consensus for 11.1%.

Read more: Did a blog post just cause software stocks to lose more than $200 billion in market cap?

Brian Robins, the CFO of Snowflake, said in a statement that the company's strategy for "durable growth" has been 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," he said.

Product revenue amounted to $1.23 billion in the fiscal fourth quarter, up 30% from a year earlier and ahead of the $1.2 billion FactSet consensus.

The company reported overall revenue of $1.28 billion for the fiscal fourth quarter, also up 30% from the prior-year period and ahead of the FactSet analyst consensus for $1.26 billion.

Adjusted earnings per share for the fiscal fourth quarter came in at 32 cents versus the 27-cent FactSet consensus.

Monness, Crespi, Hardt & Co. analyst Brian White said in a Monday report that the software sector is "grappling with growing fears" that artificial intelligence could hurt the industry's growth potential. Shares of Snowflake had fallen 27% so far this year through Wednesday's close.

However, White believes Snowflake is "well positioned" to benefit from AI despite fierce competition and a challenging economic climate.

Sridhar Ramaswamy, CEO of Snowflake, in a statement that Snowflake "sits at the center of the enterprise AI revolution."

He said that for the past decade, the company has been building a foundation to make AI "safe and scalable."

"Now, we're activating world-class agentic capabilities on top of that platform" he said.

Evercore's Materne said the report marked a "solid finish" to the year for the company and that the growth guidance puts the company in strong standing heading into fiscal year 2027.

He said that based on his conversations, the company is benefiting from tailwinds in the data-modernization space and that its AI products are gaining early traction.

See also: The stock market is reflecting fears of an AI apocalypse for white-collar jobs

-Hannah Pedone

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02-25-26 2033ET