Key Morningstar Metrics for Snowflake
- : USD 255.00Fair Value Estimate
- : ★★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : Very HighMorningstar Uncertainty Rating
What We Thought of Snowflake’s Earnings
Snowflake SNOW delivered blowout first-quarter results. Year-over-year product revenue growth of 34% beat guidance by 700 basis points. Non-GAAP operating margin also reached a new record of 11.9%, 290 basis points above the guidance.
Why it matters: Artificial intelligence remains the primary driver of Snowflake’s outperformance. Over 97% of customers have adopted Snowflake’s AI offerings, leveraging tools like Cortex Code to unlock enterprise data insights with speed.
- We see broad-based strength across both existing and new customers. Quarterly addition of major customers spending over USD 1 million annually was stable at 46, and net new customer additions of 616 were 37% higher than a year ago. Net revenue retention also improved sequentially to 126%.
- We expect positive go-to-market motions to continue in the near term as more enterprises iterate their data-driven AI products on Snowflake. The company’s recent outperformance should support our 30.5% revenue growth forecast for fiscal 2027, a 140-basis-point acceleration from fiscal 2026.
The bottom line: We increase our fair value estimate for no-moat Snowflake to USD 255, from USD 223 previously, based on more optimistic near-term revenue growth and margin outlooks. Shares currently look fairly valued after a 36% jump in after-hours trading.
- With the stock’s post-earnings rally, the market rightfully priced in Snowflake’s potential as a key data infrastructure firm in the AI era. Despite positive usage patterns, we hesitate to interpolate Snowflake’s recent outperformance into our long-term forecasts.
- Snowflake’s fully managed data platform can help enterprises quickly spin up AI prototypes, but its consumption-based pricing model may also drive cost-sensitive customers to alternative solutions as agentic AI usage surges over the long term.
Coming up: Management raised full-year product revenue growth guidance by 400 basis points to 31%. Non-GAAP operating margin guidance also increased by 100 basis points to 13.5%.
