Company Overview
Snowflake has been one of the more misread enterprise software stories of the past two years. After peaking above $400 in early 2024, the stock has spent most of 2025 and 2026 grinding lower as investors worried that AI would commoditize cloud data warehousing, that Databricks would eat its lunch, and that the consumption-based revenue model would prove too volatile in a cautious enterprise spending environment. Last night, after the close, Snowflake reported Q1 fiscal year 2027 results — and the quarter may start to change that narrative.
Coming into last night’s print, the backdrop was already improving. Snowflake’s Q4 FY2026 results, reported in February, showed product revenue of $1.23 billion growing 30% year-over-year, remaining performance obligations surging 42% to $9.77 billion, and net revenue retention of 125% — meaning existing customers are spending significantly more year after year. The company guided Q1 FY2027 product revenue of approximately $1.3 billion and set a full-year FY2027 product revenue target of $5.66 billion, above the $5.50 billion consensus. The key question heading into last night was whether Snowflake’s Cortex AI suite — its platform for running AI models directly on top of enterprise data — was accelerating from pilot to production across its customer base.
Key Technical and Fundamental Drivers
Fresh Earnings Print → Last Night’s Results Set the Tone Snowflake reported Q1 FY2027 results last night, with Wall Street expecting $1.32 billion in total revenue — a 27% year-over-year increase — and adjusted EPS of $0.32. The prior quarter delivered a 26% EPS beat and the stock moved 7.45% on the results. Readers should check this morning’s tape for the actual print; the setup heading into it was among the cleanest in enterprise software.
Cortex AI → The Pivot Investors Are Still Underpricing Snowflake’s Cortex AI suite — which lets enterprises run inference, build AI agents, and query structured and unstructured data simultaneously without moving it — is the product that changes the valuation conversation. In Q4 FY2026, Cortex AI customers grew substantially quarter-over-quarter, with management describing the transition from AI pilots to production workloads as the dominant demand driver for the year ahead. Unlike many AI software plays, Snowflake doesn’t charge for model access — it charges for the compute used when models run on top of customer data, a consumption model that scales directly with AI adoption.
$9.77 Billion RPO → Multi-Year Revenue Visibility Remaining performance obligations of $9.77 billion, up 42% year-over-year, represent contracted future revenue that gives Snowflake unusual forward visibility for a consumption-based model. The RPO figure growing faster than current revenue signals that customers are committing to larger, longer-term contracts — a sign of deepening platform dependency, not churn risk.
Net Revenue Retention at 125% → Customers Keep Spending More A net revenue retention rate of 125% means that Snowflake’s existing customer base expanded its spending by 25% over the prior year, without counting any new customer additions at all. In an environment where enterprise software vendors are fighting for every renewal, this metric says Snowflake’s core business is healthy and sticky.
Valuation Reset → Stock Still Well Below Historical Levels Despite the Q4 FY2026 recovery and improved fundamentals, Snowflake’s stock has spent 2026 trading substantially below its historical highs, creating a setup where a consistent run of strong quarters could drive meaningful multiple expansion. Options traders priced in 13.5% implied volatility heading into last night’s print — reflecting the market’s recognition that the move in either direction could be significant.
Market Takeaway
Snowflake’s investment thesis in 2026 comes down to one question: is Cortex AI accelerating from experiment to enterprise production workload? If the answer is yes — if last night’s results showed AI-driven consumption materialially above trend — then the RPO, revenue retention, and guidance trajectory point toward a stock that is meaningfully undervalued relative to where the business is heading. The $9.77 billion backlog and 125% net revenue retention are not the numbers of a company losing relevance; they are the numbers of a platform business with strong lock-in at exactly the moment AI is creating a new wave of data-intensive workloads.
The honest counterargument is real: Snowflake competes directly with Databricks, which remains private and aggressive, and with the hyperscalers’ own data services. Its consumption-based model makes revenue inherently harder to forecast, and any slowdown in enterprise AI spend would hit Snowflake’s numbers faster than it would hit a subscription-based vendor. The stock’s extended period below historical highs also reflects genuine multiple compression as growth has moderated from its early hypergrowth days. But for traders watching this morning’s reaction to last night’s results — particularly whether the stock holds any post-earnings gap up through the session — Snowflake offers one of the cleaner read-through signals for the broader state of enterprise AI adoption, and a cleaner recovery setup than most of the AI infrastructure names that have already run hard in 2026.