Snowflake (SNOW.US) revenue guidance exceeds expectations, but stock price falls. Increase in AI demand cannot hide market concerns.

Cloud data analytics platform provider Snowflake (SNOW.US) released its latest financial report on Wednesday Eastern Time. Despite the company's forecast for product revenue for the fiscal year 2027 exceeding Wall Street expectations, and the continued demand for Artificial Intelligence (AI) driving business growth, its stock price still fell by over 3% in after-hours trading. Concerns linger in the market about whether traditional software companies can maintain growth momentum in the AI era. AI-driven performance growth The financial report shows that Snowflake expects product revenue for the fiscal year ending January 31, 2027 to reach $5.66 billion, higher than the analyst's average expectation of $5.5 billion. The company's forecast for product revenue in the first quarter also exceeded market expectations, estimated to be between $1.26 billion and $1.27 billion, while analysts had previously estimated $1.23 billion. Currently, enterprise customers are increasingly migrating workloads to the cloud and increasing investments in developing AI applications, providing continuous growth momentum for companies like Snowflake. Snowflake mainly provides software for organizing, analyzing, and storing enterprise data in the cloud. CEO Sridhar Ramaswamy has been focused on expanding the company's product portfolio, particularly adding tools within its platform that can apply AI technology to stored data. According to Ramaswamy, the Snowflake Intelligence intelligent agent platform launched in November last year now has over 2,500 customers, and the company also secured the "largest single deal ever" worth over $400 million, but did not disclose the customer's name. In competition with AI unicorn Databricks, Snowflake has recently taken a series of strategic measures. The company has signed multi-year agreements worth $200 million with AI companies OpenAI and Anthropic, integrating their advanced models into its platform to drive enterprise AI applications. Meanwhile, Snowflake also acquired application monitoring platform Observe for $600 million to enhance software, system, and data performance troubleshooting capabilities. For the fourth quarter ending January 31, Snowflake's product revenue increased by about 30% year-on-year, reaching $1.23 billion, exceeding expected $1.18 billion. Adjusted earnings per share were $0.32, also higher than the expected $0.27. Market doubts persist However, these positive data have not completely dispelled market concerns. Snowflake's stock price has fallen by approximately 23% year-to-date, reflecting Wall Street's general concerns about the prospects of the software industry in the AI era. Furthermore, many analysts believe that AI's contribution to Snowflake's platform revenue is still relatively limited. In December last year, the company revealed that annual recurring revenue from its AI products had exceeded $100 million. "Investors are currently skeptical of all software companies," said D.A. Davidson analyst Gil Luria, "but as Snowflake continues to accelerate growth for the rest of this year, we believe investors will eventually realize that the company is significantly benefiting from AI growth." The company's newly appointed CFO, Brian Robins, emphasized that this quarter's performance reflects the strategic effectiveness of focusing on two key growth drivers: expanding new customers and developing them into strategic long-term customers. In the fourth quarter, the remaining performance obligation (RPO) measuring bookings reached $9.77 billion, significantly higher than the average expectation of $8.28 billion. The company currently has over 13,000 customers, including well-known enterprises like Figma (FIG.US) and BlackRock, Inc. (BLK.US).