For about four months this year, Snowflake looked like a company the market had simply decided to move on from.
The stock hit a max drawdown of more than 56% by early April 2026, even as the business kept posting quarterly beats. The bear thesis was straightforward: Databricks was closing the gap, the consumption-based revenue model was viewed as fragile, and GAAP profitability looked years away.
Then May 27 happened.
Snowflake shares soared nearly 37% in after-hours trading after four things landed simultaneously: a record earnings beat, a full-year guidance raise, a $6 billion AWS infrastructure deal, and the announced acquisition of Natoma. That is the kind of quarter that doesn’t just move a stock — it reframes the entire debate.
The Numbers Behind the Move
Revenue growth was robust, with total revenue of $1.39 billion (about 33% year-over-year). The company’s product revenue reached $1.33 billion, marking a 34% year-over-year gain. Wall Street had been looking for about $1.32 billion on total revenue. That’s a meaningful beat on the most scrutinized line item Snowflake reports.
- Non-GAAP operating margin expanded by over 300 basis points to 12%.
- Net revenue retention reached 126%, and remaining performance obligations grew 38% year-over-year to $9.21 billion.
- AI product traction for Cortex Code (CoCo) and Snowflake Intelligence was cited by management as a meaningful driver, alongside net revenue retention at 126%.
- The company added 616 net new customers in Q1, up 38% year-over-year — the most net new customer adds in company history.
The company raised its full-year product revenue guidance to $5.84 billion, indicating 31% year-over-year growth, and lifted its non-GAAP operating margin guidance for FY2027 from 12.5% to 13.5%.
What Actually Changed
Here’s the part people skipped in the noise around the stock pop.
Analysts broadly framed the quarter as an AI-and-migrations moment for Snowflake: AI is increasing urgency for governed data environments, and Snowflake is trying to capture that pull-through inside the platform.
The second force is internal — Cortex Code (CoCo) and Snowflake Intelligence. Management highlighted rapid adoption and momentum for these products, but the specific claim that CoCo is deployed across more than 7,100 accounts could not be verified in primary sources.
Slight tangent, but it matters: the Databricks threat hasn’t gone away. Competition with Databricks and hyperscalers’ data warehouse products continues to intensify, leading to heavy marketing and R&D pressure for Snowflake. The question is whether the Q1 acceleration changes the competitive math, or whether this is a one-quarter pop inside a longer structural fight. August 26 will tell you a lot.
The Valuation Problem Nobody Has Solved
The valuation snapshot in this draft (around 10x NTM EV/Revenue and roughly 98x NTM P/E) could not be verified as of July 26, 2026 from a consistent, primary, point-in-time source, and forward P/E estimates vary widely by provider and methodology.
The consumption model cuts both ways. Revenue ties directly to how much customers actually use the platform, not to fixed subscriptions. If enterprise AI spending cools in the second half of 2026, revenue could miss guidance without any change in customer count or product quality.
As of July 24, 2026, SNOW closed at approximately $268. Its all-time closing high was $401.89 on November 16, 2021. That gap is worth sitting with. The AI thesis is now real. The question is whether the current valuation already prices it.
Forward Scenarios
Bull: Q2 FY2027 (August 26) shows another acceleration in AI product consumption, Cortex adoption keeps climbing, and net revenue retention pushes toward 130%. The market re-rates toward the $300+ targets Wall Street has been floating. According to 51 analysts, the average rating for SNOW is Strong Buy, with a 12-month price target around the low-$290s (about $292.53 by one widely cited compilation).
Base: Revenue comes in around the guided $1.415 billion to $1.42 billion for Q2. Margins expand modestly. The stock holds in the $250 to $280 range as the business proves the Q1 beat wasn’t a one-time event.
Bear: Enterprise customers pull back on cloud spending into year-end, consumption growth decelerates from Q1 levels, and GAAP profitability timeline gets pushed further out. The stock re-tests the $200 to $220 range.
What to Watch at August 26 Earnings
- Product revenue vs. the guided $1.415B to $1.42B range
- Net revenue retention rate — is 126% a ceiling or a floor?
- CoCo and Snowflake Intelligence contribution to consumption
- Any update to the $6B AWS partnership timeline and revenue recognition
- GAAP operating margin trajectory
The AI data cloud debate isn’t settled. Principal risks include AI-related cost and gross-margin pressure, booking seasonality concentrated in Q4, and potential customer throttling of consumption for cost control. But the Q1 report forced even the skeptics to acknowledge something real shifted. August 26 is where that gets confirmed or complicated.
For informational purposes only.
