SNOW Stock Today: February 26 – AI Deals Lift Outlook, Shares Slip
Snow stock is in focus after Snowflake set fiscal 2027 product revenue at $5.66 billion, topping an estimated ~$5.50 billion, and guided Q1 to $1.26–$1.27 billion. For snow stock watchers, SNOW slipped about 2% after-hours as the update landed near recent expectations. Management highlighted AI-driven demand, multi-year work with OpenAI and Anthropic, and the $600 million Observe acquisition. Investors are weighing these growth drivers against margin guidance and software sentiment in the US today. Below, we break down the outlook, valuation, and the key markers to track into Q1.
Guidance and AI Deals: Key Updates
Snowflake set fiscal 2027 product revenue at $5.66 billion, slightly above the ~$5.50 billion Wall Street view, while Q1 guidance landed at $1.26–$1.27 billion. The market wanted more upside, which explains the after-hours dip despite a beat on the top-line outlook. The company issued these targets alongside its Feb 25 update. Coverage from Yahoo Finance aligns with these figures and frames the cautious reaction.
Management pointed to multi-year partnerships with OpenAI and Anthropic that should lift usage as AI workloads scale. The $600 million Observe acquisition is intended to deepen observability and data insights, broadening workloads on the Data Cloud. Still, investors asked how fast these deals translate into revenue. Reporting from Bloomberg noted the outlook failed to excite, keeping focus on execution.
The update keeps margins in focus as Snowflake funds AI expansion. R&D expense ran about 44% of revenue and stock-based compensation was roughly 37% of revenue on a TTM basis, signaling continued investment. The current ratio near 1.32 suggests solid liquidity for integration and growth. Investors want proof that operating leverage improves as AI revenue ramps and Observe gets absorbed.
Market Reaction and Valuation
Snow stock fell about 2% after-hours after guidance landed only modestly above estimates. The shift reflects a market that rewards outsized beats and firm margin progress. Broader software sentiment also skews selective, so near-term moves may track tone on cloud budgets and AI consumption. We think commentary around workload growth and customer expansions will shape the next swing more than headline guidance alone.
On trailing figures, Snowflake screens premium. Price-to-sales sits near 13.27 and enterprise value to sales about 13.41. EPS is negative, while price-to-free-cash-flow is roughly 74.9 on TTM data, implying a rich multiple for expected growth. For Snowflake stock to hold that premium, investors will look for consistent product revenue beats, visible AI-driven usage, and steady improvement in operating efficiency.
Momentum is mixed. RSI near 41 leans neutral-bearish, while ADX around 29 indicates a strong trend. Bollinger Bands center near 177 with a lower band around 150, and ATR close to 10.6 signals wider daily ranges. Traders may watch how price behaves near those bands. A sustained push above the middle band could signal improving momentum; failure there keeps pressure on the downside.
What to Track Into Q1 and FY2027
With Q1 guided to $1.26–$1.27 billion in product revenue, watch consumption trends across key customers and any commentary on budget flush or pull-forward. Management’s tone on workload expansion, new AI use cases, and data sharing volume will matter. The market also wants clarity on the pace of backlog conversion and contract durations as Snowflake refines go-to-market around AI.
AI-related demand remains the swing factor. Investors will look for proof that OpenAI and Anthropic partnerships boost training and inference workloads on the platform. We also want updates on new AI application launches, data governance features, and incremental spending from top accounts. Clear progress here can re-rate snow stock as adoption translates to sustained consumption.
Beyond growth, the path to efficiency is central. Track gross margin stability, operating margin commentary, and cash generation. TTM figures show operating cash flow per share near $2.60 and free cash flow per share around $2.31. Improving conversion alongside revenue growth would support the multiple. Any pacing on stock-based compensation moderation will also be closely watched by long-term holders.
Final Thoughts
Snow stock slipped even as Snowflake raised the bar for FY27 product revenue and set a steady Q1. The message is clear: the market wants stronger upside and firmer margin signals. For now, we see three near-term markers. First, AI-driven consumption must show up in quarterly product revenue. Second, operating leverage should build as Observe integrates and R&D intensity normalizes. Third, management needs to translate marquee partnerships into measurable expansion across top accounts. On balance, Street sentiment still skews positive, with 66 Buy, 5 Hold, and 1 Sell ratings, and our quantitative grade stands at B+. For US investors, stagger entries, track execution each quarter, and reassess if margin progress stalls.
FAQs
Why did snow stock fall after the guidance update?
Shares slipped about 2% after-hours because the outlook, while above estimates, was not strong enough to re-rate the stock higher. Investors wanted a bigger beat and clearer margin progress. Broader software sentiment is also selective, so modest guidance can trigger profit-taking even when headline numbers look fine.
What is Snowflake’s FY27 and Q1 revenue outlook?
Management guided fiscal 2027 product revenue to $5.66 billion, slightly above an estimated ~$5.50 billion. For Q1, product revenue is expected at $1.26–$1.27 billion. The market welcomed the direction but wanted more upside and detail on how AI partnerships and the Observe deal translate into near-term consumption.
How do OpenAI and Anthropic partnerships affect Snowflake earnings?
These multi-year deals should add workloads as customers build and scale AI applications. More training and inference on Snowflake’s platform can lift consumption, supporting product revenue. The key is timing: investors want proof that usage gains are material and sustained, which would strengthen Snowflake earnings power over the next few quarters.
Is Snowflake stock expensive on current metrics?
On trailing data, Snowflake trades at a premium. Price-to-sales is about 13.3 and price-to-free-cash-flow is near 74.9, with negative EPS. That valuation assumes strong growth and improving margins. To justify it, Snowflake needs consistent product revenue beats, visible AI-driven adoption, and steady operating leverage over time.
What are the top risks for snow stock now?
Key risks include slower cloud budgets, delayed AI adoption, integration risk from the Observe acquisition, and intense competition. High stock-based compensation and rich valuation add sensitivity to any growth hiccup. If margins lag or AI workloads scale slower than expected, the stock could stay range-bound or retrace.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.