Snowflake Announced a $200 Million Deal With Anthropic, but It Wasn't Enough for Investors. Here's Why.

Core Insights - Snowflake reported strong quarterly results but experienced a significant stock sell-off, dropping over 11% after the earnings release [1][3]. Financial Performance - For Q3 of fiscal 2026, Snowflake achieved non-GAAP earnings per share of $0.35 on sales of $1.21 billion, surpassing analyst expectations of $0.31 per share on $1.18 billion in sales [1]. - Product revenue increased by 29% year-over-year to $1.16 billion, while overall revenue grew approximately 28% year-over-year [6]. - Remaining performance obligations (RPO) rose 37% annually to $7.88 billion, and the company added 615 new customers during the quarter [6]. Strategic Developments - Snowflake entered a new $200 million multi-year contract with Anthropic, enhancing the integration of Anthropic's Claude AI with Snowflake's Cortex AI platform [2][4]. - The company reached its $100 million AI revenue run rate target one quarter earlier than anticipated, indicating strong growth in its AI segment [4]. Market Reaction - Despite the positive earnings and partnership news, investors reacted negatively, leading to a stock decline of 11.4% [3]. - Concerns arose from a GAAP operating loss of $329.5 million and high expenditures on sales and marketing, which overshadowed the revenue growth [7]. - Forward guidance for product revenue was set between $1.195 billion and $1.2 billion for the current quarter, which, while above analyst estimates, did not meet the expectations of some shareholders [8].