Snowflake lifts fiscal 2027 outlook on strong AI adoption

Snowflake reported second-quarter fiscal 2027 non-GAAP earnings of 62 cents per share, a 77.1% year-over-year increase that exceeded consensus estimates by nearly 38%. Revenue reached $1.55 billion, up 35.1% from the prior year, with product revenues accounting for 96% of the total. The company attributed this performance to robust consumption of its core data platform and a notable acceleration in artificial intelligence revenue streams.

Management noted that AI products contributed to roughly half of the recent growth acceleration. The AI coding agent, CoCo, added over 2,000 new accounts in the quarter, bringing its total customer base to 9,100. This expansion coincided with an 89% year-over-year rise in customer use cases, indicating deeper integration of Snowflake’s tools into enterprise workflows.

Guidance reflects increased AI demand

For the third quarter of fiscal 2027, Snowflake projects product revenues between $1.588 billion and $1.593 billion, implying 37% to 38% year-over-year growth. This outlook sits above the $1.5 billion consensus estimate reported by CNBC TV18. The company also raised its full-year fiscal 2027 product revenue target to $6.07 billion, representing 36% growth, up from the previous estimate of $5.84 billion at 31% growth.

Profitability metrics were also adjusted upward. Snowflake now expects a 14.5% non-GAAP operating margin, an increase from the prior 13.5% target. The company maintains a 74% non-GAAP product gross margin and a 23% adjusted free cash flow margin. These figures suggest that the increased investment in AI capabilities is being offset by strong unit economics and scale.

Market response to earnings beat

Snowflake shares have gained approximately 6.8% over the past five days, reflecting the post-earnings surge followed by some profit-taking. Analyst sentiment has improved, with eight of 12 analysts raising earnings estimates for the upcoming quarter within the last week. For the full fiscal year, nine of 15 analysts have similarly revised their forecasts upward.

The consensus estimate for the next quarter’s earnings per share has risen from 53 cents to 59 cents over the past year. According to GN markets/earnings (en-US), this trend underscores a broader shift in investor perception, driven by Snowflake’s ability to monetize AI features within its existing data cloud infrastructure. The company continues to compete with peers like Dell Technologies and Oracle by integrating AI models directly into enterprise data workflows.