SNOW Expands Cloud Infrastructure Reach: A Sign for More Upside?

Core Insights - Snowflake (SNOW) is experiencing significant growth due to its expansion in cloud infrastructure and focus on AI capabilities, with product revenue increasing by 29% year-over-year to $1.16 billion in Q3 FY26 [1][10] - The company has remaining performance obligations of $7.88 billion, reflecting a 37% year-over-year growth [1][10] Growth Drivers - Collaboration with major cloud providers like AWS and Google Cloud has been pivotal, with Snowflake surpassing $2 billion in sales through AWS Marketplace in a single calendar year and receiving 14 AWS Partner awards [2] - The partnership with Google Cloud to integrate Gemini models into Snowflake's AI offerings enhances customer access to advanced AI capabilities [2] AI Focus - Snowflake achieved a $100 million AI revenue run rate one quarter earlier than expected, driven by the adoption of Snowflake Intelligence and Cortex AI [3] - AI is influencing 50% of bookings signed in Q3 FY26, with 28% of all deployed use cases incorporating AI, solidifying Snowflake's position in enterprise AI [3] Future Projections - For Q4 FY26, Snowflake expects product revenues to be in the range of $1.195 billion to $1.2 billion, indicating a year-over-year growth of 27% [4] Competitive Landscape - Snowflake faces competition from Alphabet (GOOGL) and MongoDB (MDB), both expanding in the cloud analytics space [5] - Google Cloud's revenues increased by 33.5% year-over-year to $15.16 billion in Q3 FY25, indicating strong growth in the cloud market [6] - MongoDB's Atlas platform has shown a year-over-year growth of 30% in Q3 FY26, now representing 75% of its total revenue [7] Stock Performance and Valuation - Snowflake shares have decreased by 2.7% over the past 12 months, underperforming the Zacks Computer & Technology sector's return of 13.6% [8] - The stock is trading at a forward Price/Sales ratio of 12.42X, significantly higher than the Internet Software industry's 4.34X [11] - The Zacks Consensus Estimate for SNOW's fiscal 2026 earnings is $1.20 per share, indicating a 44.58% year-over-year increase [13]