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Key Takeaways

• Snowflake fell after a hyperscaler outage cut Q3 revenue by up to $2 million.
• Snowflake posted strong AI adoption, adding 370 GA capabilities and rapid platform uptake.
• Snowflake raised growth visibility with Q4 and FY26 product revenue guidance showing double-digit gains.

Snowflake (SNOW - Free Report) shares lost 11.4% since it reported its third-quarter fiscal 2026 results on Dec. 3. This decline can be attributed to a hyperscaler outage, which impacted Snowflake’s revenues by approximately $1 million to $2 million in the third quarter of fiscal 2026. Click here to check the details of Snowflake’s third-quarter fiscal 2026 results.

However, the company’s shares have soared 27.9% over the past year, outperforming the Zacks Computer and Technology sector’s growth of 25% and the Zacks Internet Software industry’s decline of 1%.

The outperformance in Snowflake stock is driven by its strong portfolio and an expanding partner base. The company also benefits from strong adoption and increasing usage of its platform, as reflected by the net revenue retention rate of 125% in the third quarter of fiscal 2026.

Snowflake Stock Performance
 

Image Source: Zacks Investment Research

Snowflake Benefits From Expanding Portfolio

Snowflake is benefiting from its expanding portfolio, which is driving robust growth and solidifying its position as a leader in the enterprise AI and data cloud space. The company introduced 370 new GA product capabilities year-to-date, marking a 35% increase over the previous year.

Snowflake’s focus on artificial intelligence has been a key catalyst, with AI influencing 50% of bookings signed during the fiscal third quarter. The company achieved a $100 million AI revenue run rate one quarter earlier than expected, reflecting strong enterprise adoption of its AI capabilities.

The company’s addition of Snowflake Intelligence, its agentic AI platform, has been a key catalyst. In the fiscal third quarter of 2025, this product has seen rapid adoption, with 1,200 customers leveraging its capabilities to transform how businesses interact with their data. 

Snowflake’s investments in artificial intelligence and machine learning, including the introduction of Cortex AI and its integration with models from OpenAI and Anthropic, drove customer engagement. In the third quarter of fiscal 2026, the company announced that more than 7,300 customers are using Snowflake’s AI and ML technology weekly.

Rich Partner Base Expands Snowflake’s Clientele

Snowflake’s strong partner base, which includes major players like SAP (SAP - Free Report) , Microsoft, Amazon’s (AMZN - Free Report) cloud computing platform Amazon Web Services (AWS), NVIDIA (NVDA - Free Report), Meta Platform, ServiceNow, Fiserv, EY, LTMindtree, Next Pathway, and S&P Global, has been a significant growth driver of its success.

Snowflake reported 20% year-over-year growth in the number of customers, reaching 12,621 in the fiscal third quarter of 2026. The company now has 688 customers, with trailing 12-month product revenues greater than $1 million (up 29% year-over-year) and 766 Forbes Global 2000 customers.

Snowflake recently announced that it has surpassed $2 billion in Amazon Web Services Marketplace sales, doubling year-over-year growth as it strengthens its partnership with AWS. The company is also introducing new joint innovations with AWS, including Amazon Bedrock AgentCore integrations, catalog federation with AWS Glue, and expanded Iceberg V3 support. These developments aim to help businesses modernize their data platforms and create AI-ready, open, and interoperable architectures.

In November 2025, Snowflake announced a native integration with NVIDIA. This integration with NVIDIA brings GPU-accelerated CUDA-X DS libraries into Snowflake ML. It enables significant speed improvements for data science workflows without requiring any changes to the code.

Snowflake also announced a new collaboration with SAP to integrate its AI Data Cloud with SAP Business Data Cloud, enabling seamless, zero-copy access to semantically rich enterprise data for advanced AI, analytics, and intelligent application development.

Snowflake Offers Positive Q4 and FY26 Guidance

Snowflake’s rich partner base, expanding clientele, and an innovative portfolio are expected to drive the company’s top-line growth.

For the fourth quarter of fiscal 2026, Snowflake expects product revenues in the range of $1.195-$1.2 billion. The projection range indicates year-over-year growth of 27%. The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues is pegged at $1.23 billion, indicating 24.99% year-over-year growth. 

The consensus mark for earnings is pegged at 29 cents per share, which has remained unchanged over the past 30 days. This suggests a decline of 3.33% year-over-year.

For fiscal 2026, Snowflake expects product revenues of $4.446 billion, indicating 28% year-over-year growth. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $4.60 billion, indicating 26.90% year-over-year growth. 

The consensus mark for earnings is pegged at $1.17 per share, which has remained unchanged over the past 30 days. This suggests an increase of 40.96% year-over-year.

Snowflake Inc. Price and Consensus
 

Image Source: Zacks Investment Research | Snowflake Inc. Quote

Snowflake Trading At a Premium

Snowflake shares are overvalued, as suggested by the stock's Value Score of F.

Snowflake stock has been trading at a premium with a forward 12-month Price/Sales of 14.55X compared with the Internet Software industry’s 4.83X.

Price/Sales (Forward 12-Month)
 

Image Source: Zacks Investment Research

What Should Investors Do With Snowflake Stock?

Despite Snowflake’s robust portfolio, challenging macroeconomic uncertainties, and stiff competition from hyperscale cloud providers remain a headwind. The stretched valuation also makes the stock risky right now.

Snowflake currently carries a Zacks Rank #3 (Hold) rating, suggesting that it may be wise to wait for a more favorable entry point in the stock.

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