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What Happened?
Shares of data warehouse-as-a-service Snowflake (NYSE:SNOW) jumped 13.5% in the pre-market session after the company reported impressive fourth-quarter results that beat analysts' revenue expectations. Product revenue, which accounts for most of the company's sales, grew 28% and benefited from strong customer adoption and a 126% net revenue retention rate, with several large customers exceeding their commitments.
Looking ahead, full-year fiscal 2026 product revenue guidance implies 24% growth, topping Wall Street's expectations, with management highlighting stability in its core data warehouse and momentum from new product adoption. With $6.9 billion in remaining performance obligations, a 33% increase from last year, Snowflake enters the year with solid revenue visibility.
The company also deepened its partnership with Microsoft, integrating OpenAI models and expanding AI capabilities, positioning itself as a key player in the evolving data and AI landscape.
Separately, CFO Mike Scarpelli announced plans to retire but will remain in his role until a successor is named. Overall, there was a lot to like about the quarter.
The shares closed the day at $173.77, up 4.6% from previous close.
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What The Market Is Telling Us
Snowflake’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for Snowflake and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was about a month ago when the stock gained 7.3% as the debate around the future of AI continues following the unveiling of DeepSeek. The market is recalibrating and rotating to stocks that are not only more insulated if DeepSeek prevails in the AI arms race but to stocks that may actually benefit no matter who wins that race. The proliferation of AI will be a general tailwind to demand for cybersecurity, big data, and automation software. For example, AI can make bad actors better and make the search for vulnerabilities faster. This means that enterprises will need more of what CrowdStrike, Zscaler or Cloudflare offer.
Additionally, more data is only valuable if the mountains of numbers, text, and videos can lead to actionable insights. AI can do exactly that, meaning that enterprises will get more value from platforms like Snowflake and MongoDB. Similarly, AI can make automation software more valuable by making it more adaptive, which means that customers can extract more platforms from platforms like ServiceNow and Appian.