NEW YORK, May 7, 2026, 10:06 EDT
Snowflake surged roughly 10% Thursday, propelled by a software sector rally after Datadog boosted its full-year forecast—a jolt that shifted attention back to the data-cloud firm just three weeks ahead of its next earnings release. Shares changed hands at $153.21 as of 10:06 a.m. in New York.
The rebound stands out, challenging the prevailing Snowflake narrative for this year: although growth holds up, investors remain unconvinced that artificial intelligence will translate that into lasting, higher-margin business. In the last day, a Yahoo Finance markets piece called out a 35% drop in the stock year-to-date, citing margin pressure from AI spending and increased competition.
Snowflake’s cloud data software runs on a usage-based billing system—customers are charged according to actual use, not just locked-in subscriptions. When clients ramp up workloads, revenue can surge. But as soon as those same clients pull back on cloud spending, any slowdown shows up right away.
Datadog kicked off the rally in the sector. The observability software company’s first-quarter revenue landed at $1.01 billion, a 32% jump from last year, and it raised its full-year outlook to $4.30 billion to $4.34 billion. The stock surged nearly 29%. MongoDB picked up roughly 12% as well—another clear signal that investors are moving back into software tied to cloud and AI.
Snowflake hasn’t seen its numbers crater. Last quarter, product revenue climbed 30% to $1.23 billion. Remaining performance obligations hit $9.77 billion, up 42%. Net revenue retention landed at 125%, showing existing customers are still boosting spend even after accounting for churn and cutbacks.
The company is forecasting first-quarter fiscal 2027 product revenue between $1.262 billion and $1.267 billion, which works out to 27% growth. For the full year, it expects product revenue to reach $5.66 billion. Growth remains brisk, but those numbers fall short of the earlier hypergrowth pace that previously justified a higher multiple.
AI is now at the heart of Snowflake’s pitch. The company has rolled out Snowflake Intelligence and Cortex Code, both geared toward letting firms deploy AI agents that act across data and business platforms—not just generate responses on demand. According to Snowflake, over 9,100 accounts tap its AI features each week, and in just three months, Snowflake Intelligence has seen uptake from around 2,500 accounts.
Back in February, Chief Executive Sridhar Ramaswamy said “the promise of AI became real” during the quarter. Last month, Baris Gultekin, Snowflake’s vice president of AI, talked about the company’s aim to get customers using AI with “the right data and guardrails.” Snowflake
There’s at least some evidence of institutions buying the dip. Swedbank disclosed in its latest 13F that it owned roughly 1.65 million Snowflake shares at the end of March, up from about 1.33 million three months earlier. The position’s value, however, dropped as shares lost ground during the quarter.
Analysts aren’t walking away yet, but there’s a limit to how long they’ll wait. TipRanks still lists 30 buys, three holds, zero sells, and the average price target sits at $225.17. Bank of America’s Koji Ikeda trimmed his target down to $195 from $275, sticking with a buy even after reducing his infrastructure software forecasts.
The risk is hard to miss. Yes, AI demand could keep climbing, but higher costs to support that demand threaten margins—and competition for cloud budgets is fierce, with Datadog, MongoDB, and a crowd of private data firms in the mix. Should Snowflake’s May report reveal sluggish consumption, slipping retention, or a bigger AI bill, Thursday’s rally might just end up a short-covering bounce instead of a true shift in the stock’s direction.
Snowflake will release its fiscal first-quarter numbers after U.S. markets shut on May 27, with an investor call set for 2 p.m. Pacific. This time, investors aren’t looking for fresh AI buzzwords. What they want to see: whether AI workloads are actually driving revenue, renewing contracts, and showing some margin discipline.
