Snowflake sees annual revenue above estimates on strong AI demand

Snowflake expects fiscal 2027 product revenue of US$5.7 billion, above analysts’ average estimate of US$5.5 billion compiled by LSEG, driven by rising AI demand.

The cloud data platform, with over 13,000 clients including BlackRock and Figma, reported Q4 product revenue up 30% to US$1.2 billion, beating analysts’ estimate of US$1.2 billion.

CEO Sridhar Ramaswamy said the company signed its largest deal ever, over US$400 million, without naming the client.

Snowflake forecasts Q1 product revenue between US$1.3 billion and US$1.3 billion, above analysts’ midpoint estimate of US$1.2 billion. It aims for a 75% product gross margin in 2027, down from 75.8% in fiscal 2026.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

A strong quarter, but a rival is moving faster

Snowflake’s guidance came in above expectations, yet its forecast of 27% product revenue growth for fiscal 2027 trails Databricks, which grew at over 55% a year at a similar revenue scale in late 2025 1.
That gap likely kept the market response subdued, since investors often judge cloud companies against close competitors 1.
Snowflake’s net revenue retention has leveled off at 125%, down from a 171% peak, while Databricks has kept retention above 140% 1.
The contrast stands out most in AI, where Databricks reported a $1 billion AI revenue run-rate versus Snowflake’s roughly $100 million AI revenue run rate as of its Q3 FY2026 earnings in December 2025 1.

A measured shift toward running more enterprise workloads

The deals fit a plan to move Snowflake beyond data governance and analytics, toward a place where enterprises build and run AI-native applications and workflows 2.
Snowflake’s $600 million acquisition of Observe, an app-monitoring platform, takes aim at the $50 billion IT operations market and ties observability to Snowflake’s data and AI products 2.
Two separate $200 million partnerships with OpenAI and Anthropic back a model-agnostic approach, keeping Snowflake positioned as a secure hub for enterprise AI work while giving customers options among model providers 3.
New AI products factor into fiscal 2027 non-GAAP product gross margin guidance of 75%, down from 75.8% in fiscal 2026, since management said these newer offerings carry lower margins than the core business 2.