Snowflake shares (SNOW) have been trending upward ahead of earnings, adding 4.02% in the most recent session, up 42% over the past 6 weeks. This move reflects growing investor optimism as the company prepares to release its Q1 FY2027 earnings after market close tomorrow (May 27).
Analysts are projecting an adjusted EPS of $0.32 and revenue of approximately $1.32 billion for the quarter. These estimates align with Snowflake’s guided product revenue range of $1.262 billion to $1.267 billion, representing roughly 27% year-over-year growth.
What To Expect
Snowflake has a strong track record of exceeding expectations, having surpassed analyst estimates in the last seven consecutive quarters. In Q4 FY2026, the company reported an adjusted EPS of $0.32, beating the consensus estimate of $0.27. Revenue for the same period reached $1.28 billion, a 30.1% increase compared to the previous year.
A key area of focus for investors will be the rate of product revenue growth. The primary question is whether the company will show further deceleration from Q4’s 30% rate. Management’s decision to reaffirm or update the full-year FY2027 product revenue guidance of approximately $5.66 billion will also be closely scrutinized.
Beyond the headline numbers, investors are keenly interested in the performance of Snowflake’s AI Data Cloud. Metrics such as net revenue retention, which stood at 125% as of last quarter, customer base growth, and progress on Cortex AI offerings will be critical in assessing the sustainability and potential reacceleration of growth driven by AI-related workloads.
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Despite the recent surge, Snowflake’s stock performance has been mixed year-to-date. While shares are up 26% through May, they remain 20.5% lower YTD. Analysts currently have a strong buy consensus rating on Snowflake, with 44 recommendations to buy and only one suggesting a sale. The average 12-month price target is $229.66, suggesting a potential upside of approximately 33% from the current price.
Eyes will move to key metrics such as net revenue retention, customer base expansion, and advancements in AI-driven workloads to gauge the company’s long-term growth prospects, with the guidance likely to hold sway over the subsequent stock move. A strong beat and raise could provide the boost needed for bulls to continue to rally, while any disappointment is likely to be harshly treated.
Bull Case:
- Strong track record of beating analyst estimates for seven consecutive quarters.
- Analysts hold a strong buy consensus with a significant potential upside of approximately 33% based on the average price target.
- High net revenue retention rate of 125%, indicating strong customer loyalty and expansion.
- Growth potential driven by the AI Data Cloud and Cortex AI offerings, which could reaccelerate revenue.
Bear Case:
- Concerns over a potential deceleration in the product revenue growth rate from the previous quarter’s 30%.
- High stock volatility, with the price down 20.5% year-to-date despite recent gains.
- The current stock price is in the lower half of its 52-week range, suggesting investor caution.
- Future performance is heavily dependent on management’s upcoming full-year revenue guidance.
