The setup
Snowflake enters its Q2 FY27 earnings report with high expectations following a strong Q1 that signaled a re-acceleration in growth driven by AI adoption. Investors are focused on whether the company can sustain its momentum in product revenue and maintain its premium valuation.
The market is looking for evidence that AI agent activity is translating into durable, paid production workloads rather than temporary experimental usage. Management previously guided Q2 FY27 product revenue to approximately $1.4 billion, representing roughly 30% year-over-year growth.
- Full-year FY27 product revenue target is currently set at $5.84 billion.
- Cantor Fitzgerald raised its price target to $405 from $282, citing strong checks for a beat-and-raise report.
- Benchmark increased its price target to $360, highlighting robust demand in AI, cloud, and analytics workloads.
- TD Cowen maintained a Buy rating, citing positive momentum in Snowflake's AI tools.
Consensus numbers
Wall Street expects Snowflake to report earnings per share of $0.447 for the second quarter. Revenue estimates currently sit at $1.483 billion.
The company has consistently outperformed revenue and EPS estimates over the last three quarters. Investors are watching for a potential raise to the full-year outlook to support the stock's recent rally.
- Q2 FY27 EPS estimate: $0.447.
- Q2 FY27 Revenue estimate: $1.483 billion.
- Q1 FY27 actual EPS: $0.39 vs $0.319 estimate.
- Q1 FY27 actual revenue: $1.391 billion vs $1.324 billion estimate.
- Q4 FY26 actual EPS: $0.32 vs $0.272 estimate.
- Q4 FY26 actual revenue: $1.284 billion vs $1.257 billion estimate.
- Q3 FY26 actual EPS: $0.35 vs $0.312 estimate.
- Q3 FY26 actual revenue: $1.213 billion vs $1.184 billion estimate.
What we'll watch on the call
Product revenue remains the primary driver of the consumption-based model, and growth must stay above 30% year-over-year to justify current valuation multiples. Net Revenue Retention, which rebounded to 126% in Q1, is critical to proving that existing customers are deepening platform usage.
Analysts are scrutinizing the adoption rates of Cortex Code and Snowflake Intelligence to determine if they are driving incremental compute consumption. Management will also face questions regarding the impact of the new AWS partnership on the 75% non-GAAP product gross margin target.
- Is current AI agent activity reflecting paid production workloads or well-funded experiments?
- Can incremental AI consumption effectively offset potential customer optimizations and cost-governance efforts?
- How are cloud migration trends impacting enterprise-wide data platform adoption?
- Are there signs of tighter cost governance from clients facing pressure to demonstrate AI ROI?
Fintwit's AI verdict
The sentiment surrounding Snowflake remains cautious yet optimistic as the company transitions into a more mature phase of its AI-driven growth cycle. Market participants are weighing the potential for a significant beat against the risks of high valuation multiples in a volatile software sector.
The upcoming report will serve as a litmus test for whether the platform's stickiness can withstand broader enterprise scrutiny of AI spending. Investors should prepare for potential price swings as the market digests the guidance for the remainder of the fiscal year.