Snowflake (SNOW) Stock: Strong Quarter Can’t Save Shares From 8% Plunge

TLDR

• Snowflake beat Q3 expectations with 35 cents EPS and $1.21 billion revenue but shares tumbled 8-9% after hours.
• Fourth-quarter product revenue forecast of $1.195-$1.2 billion exceeded estimates but disappointed investors seeking 30%+ growth.
• The company signed a $200 million deal with Anthropic to bring Claude AI models to 12,600+ customers.
• Remaining performance obligations surged 37% to $7.88 billion, topping the $7.43 billion analyst estimate.
• Stock had already rallied 72% year-to-date before the earnings announcement.

Snowflake delivered a solid third quarter that beat Wall Street on every metric. Investors sold anyway.

The cloud data company reported adjusted earnings of 35 cents per share on Wednesday evening. Analysts polled by FactSet expected 31 cents.

Revenue reached $1.21 billion versus the $1.18 billion consensus. Product revenue specifically totaled $1.16 billion against estimates of $1.13 billion.

Snowflake Inc., SNOW

Remaining performance obligations climbed 37% year-over-year to $7.88 billion. This forward-looking metric tracks contracted revenue not yet on the books. The Street wanted $7.43 billion.

The Guidance Problem

Here’s where things went sideways. Snowflake guided fourth-quarter product revenue to $1.195-$1.2 billion.

That beats analyst estimates of $1.18 billion. But it represents just 27% growth.

After a 72% stock rally this year, investors priced in something closer to 30% or better. They didn’t get it.

Shares closed Wednesday up 2.1% at $171.81. After hours, the stock cratered between 8% and 9.3%.

Full-year product revenue guidance came in at $4.45 billion. That’s above the $4.41 billion consensus but apparently not enough to satisfy the bulls.

Major AI Partnerships Announced

The earnings release came with some splashy partnership news. Snowflake inked a multiyear $200 million agreement with Anthropic.

The deal brings Anthropic’s Claude AI models to Snowflake’s platform. Over 12,600 global customers will get access.

Anthropic launched Claude Opus 4.5 on November 24. That’s its most advanced AI model yet.

CEO Sridhar Ramaswamy positioned Snowflake as the cornerstone for customer data and AI strategies. He stressed the company delivers real business impact at scale.

Snowflake also expanded its Accenture partnership to help enterprises scale generative AI. The company passed $2 billion in AWS Marketplace sales this year and announced fresh Amazon Web Services integrations.

Google’s Gemini AI is another partner. Snowflake is embedding large language models directly into its platform so customers can build AI applications on their managed data.

What Analysts Are Watching

The Montana-based company is riding the generative AI wave as businesses accelerate their strategies. Companies are deploying large language models for analytics, automation and customer engagement.

That creates natural demand for cloud data services. Snowflake positions itself right at that intersection.

The third-quarter beat shows the business model is working. Product revenue keeps growing as companies need somewhere to organize and secure data for AI applications.

The stock’s 72% year-to-date gain set a high bar for this earnings report. Snowflake cleared most hurdles but stumbled on the one investors cared about most: future growth acceleration.

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