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Snowflake (NYSE:SNOW) is on fire, jumping over 13.3% at 9.10am in premarket trading after smashing Wall Street's expectations. The cloud data giant posted Q4 earnings of 30 cents per share on $986.8 million in revenueeasily topping estimates of 18 cents on $957 million. More importantly, product revenue, a key gauge of customer usage, hit $943.3 million, beating projections. The market is also loving Snowflake's expanded partnership with Microsoft, bringing OpenAI models into its platform. And while CFO Michael Scarpelli plans to step down, analysts see this as a sign of smooth leadership transition rather than a red flag.
Needham analysts wasted no time raising their price target to $215 from $200, keeping their Buy rating intact. Their reasoning? Snowflake's AI and data engineering products are gaining serious traction, and big customers are ditching spending commitments in favor of on-demand contractsa move that could supercharge future bookings. The company's fiscal 2026 outlook is just as strong, with 24% product revenue growth expected, well ahead of consensus. Other firms, including Evercore ISI and KeyBanc, have also bumped up price targets, citing Snowflake's strong execution and its ability to land major enterprise deals.
CEO Sridhar Ramaswamy's strategy shift is clearly paying off, with Snowflake positioned for even stronger growth in fiscal 2026. AI workloads are set to ramp up, customer adoption is accelerating, and analysts expect profitability to finally turn positive in the coming year, forecasting an EPS of $0.76 for fiscal 2025. With a rock-solid 67.3% gross profit margin and demand trends pointing up, Snowflake is proving it's not just riding the AI waveit's helping build it.
This article first appeared on GuruFocus.