Snowflake Inc. is set to release its fiscal first-quarter earnings after U.S. markets close on Wednesday, May 27, with investors closely watching for evidence that its artificial intelligence investments are translating into stronger platform usage rather than just product announcements. The report comes amid a backdrop of mixed analyst sentiment, with many firms maintaining positive ratings but trimming price targets as concerns over AI-related spending and competitive pressures mount.
Revenue and Earnings Expectations
Wall Street consensus, as compiled by Zacks, calls for adjusted earnings of 32 cents per share on revenue of $1.32 billion. The company itself guided for fiscal first-quarter product revenue—the metric most closely tied to customer consumption—of $1.262 billion to $1.267 billion, representing approximately 27% year-over-year growth. Snowflake shares have declined 21.5% year-to-date, trading at about 9.4 times forward 12-month sales, a premium to the internet software industry's average of 3.81 times.
Analyst Views and Price Target Changes
TD Cowen reaffirmed a Buy rating on Snowflake with a $255 price target on May 22, citing partner checks that indicated a strong quarter and improved outlooks. The firm highlighted core cloud data-warehouse consumption, competitive migrations, adoption of Snowpark, and machine-learning use as key growth drivers. However, not all analysts were equally bullish. Benchmark raised its price target to $200 from $190 while maintaining a Buy rating, and RBC Capital cut its target to $220 from $245 but kept an Outperform rating, describing the setup as "tricky but favorable" heading into the results.
According to MarketBeat, Snowflake holds an average "Moderate Buy" rating from 40 firms, comprising 33 buy ratings, five holds, one sell, and one strong sell. The average 12-month price target stands at $242.19.
Recent Performance and Key Metrics
In the fiscal fourth quarter, Snowflake reported total revenue of $1.28 billion, up 30% year over year, with product revenue of $1.23 billion also rising 30%. CEO Sridhar Ramaswamy characterized the quarter as "another strong performance," while CFO Brian Robins emphasized the company's focus on "stability and operational rigor." As of January, Snowflake's net revenue retention rate stood at 125%, indicating that existing customers are spending significantly more over time. The company ended the period with 733 customers generating more than $1 million in trailing 12-month product revenue, and remaining performance obligations—contracted revenue not yet recognized—totaled $9.77 billion.
Risks and Competitive Landscape
Despite the positive indicators, risks remain. Zacks flagged potential headwinds from lower gross margins due to investments in new AI products and a 150-basis-point free-cash-flow impact from the Observe acquisition. The competitive environment is intensifying, with cloud giants Oracle, Amazon, and Alphabet expanding their AI and cloud offerings, posing a threat to Snowflake's market position. The key question for investors is whether AI-driven demand will lift usage without eroding profitability and cash flow.
Snowflake shares last traded at $172.20 before Tuesday's open, giving the company a market capitalization of approximately $58.5 billion. The market's reaction to the earnings report will likely hinge less on a slight earnings beat and more on management's ability to demonstrate that AI-related consumption is accelerating without a disproportionate hit to margins.
