The Snowflake stock fell 9% in early trading on Thursday, after the publication of forecasts for Q4 that were deemed disappointing. The cloud software publisher said that revenue growth from products would slow, hit by discounts on long-term contracts that have no immediate effect on revenue. This announcement, deemed prudent despite solid results, comes as the stock is up over 70% YTD.
Snowflake expects 27% growth in product revenue in Q4, versus 29% in Q3, when it posted revenue of $1.21bn, above market expectations ($1.18bn according to LSEG), but slightly down from recent performances of peers such as Datadog or MongoDB. The group's market capitalization, which is nearly $90bn, could lose about $7bn if the pre-market trend persists.
Despite this anticipated slowdown, at least 13 analysts have raised their target prices for the stock, helped by the surge in artificial intelligence features. In particular, Snowflake signed a $200m deal with Anthropic to integrate Claude models into its platform. The company says over 7,300 businesses are already using its AI tools weekly, and its autonomous "Snowflake Intelligence" solution has drawn 1,200 customers in its first month. Analysts praise these promising beginnings while noting the stock's high valuation, trading at over 165x estimated annual earnings.
