TLDRs;
- Snowflake Q4 revenue rises 30 percent with backlog growth signaling strong demand
- Fiscal 2027 guidance beats estimates but growth is expected to slow
- AI partnerships with OpenAI and Anthropic face scrutiny over real usage and margins
- Investors await March 3 conference for updates on AI demand and platform integration
Snowflake Inc (NYSE:SNOW) shares retreated in after-hours trading Thursday, reversing part of their gains from the regular session as investors weighed the company’s earnings report against its AI partnership announcements.
The stock slipped 1.9% after the bell to $169.75, after closing the day up 2.28% at $173.06, reflecting cautious sentiment in the tech sector despite strong quarterly results.
Q4 Revenue Surges, Backlog Grows
Snowflake reported fourth-quarter product revenue of $1.23 billion, up 30% from the same period last year, contributing to total revenue of $1.28 billion. The company’s remaining performance obligations, which represent contracted but unrecognized revenue, climbed 42% to $9.77 billion.
Net revenue retention reached 125%, demonstrating strong customer engagement. CEO Sridhar Ramaswamy highlighted that Snowflake’s AI-driven platform is gaining traction, with more than 2,500 clients using its “agentic” tools that act autonomously on user behalf. CFO Brian Robins noted the addition of 740 net new customers during the quarter.
Guidance Signals Moderating Growth
While Snowflake projected fiscal 2027 product revenue of $5.66 billion, above Wall Street’s $5.50 billion consensus, the company also warned that product revenue growth is expected to moderate to 27% in both Q1 and the full year.
Analysts interpret this slowdown as a potential signal of cautious IT spending and more measured adoption of AI workloads across enterprises.
“The forecast suggests that while demand is strong, the pace of growth may not maintain its earlier trajectory,” said market analyst Gil Luria of D.A. Davidson.
AI Partnerships Face Investor Scrutiny
Snowflake announced multi-year agreements worth $200 million each with OpenAI and Anthropic, alongside a $600 million acquisition of app-monitoring platform Observe. Investors are closely watching whether these partnerships will translate into meaningful platform consumption or simply generate hype.
Analysts note that AI-related workloads can drive costs higher, potentially pressuring margins if adoption does not match expectations.
“Investors remain skeptical about software companies navigating AI transitions,” Luria added, highlighting the cautious tone surrounding the sector.
Eyes on Upcoming Conference
Snowflake’s leadership is scheduled to present at the Morgan Stanley Technology, Media & Telecom Conference on March 3, where they are expected to provide updates on AI demand, profitability trends, and integration progress for Observe.
Traders will be monitoring the session closely for signals on whether the company’s AI strategies are translating into sustainable revenue growth. Market participants see the presentation as a key opportunity for Snowflake to reaffirm confidence in its AI-driven platform amid a backdrop of cautious investor sentiment.
Snowflake’s after-hours pullback highlights the fine line tech companies face between robust revenue results and investor concerns over future growth sustainability. While AI partnerships have bolstered expectations, the real test will come as enterprise adoption accelerates and margins are measured against rising operational costs.
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