Snowflake Inc. (SNOW) has seen its shares decline by 18.9% over the past three months, vastly underperforming the Zacks Computer and Technology sector, which decreased by 6.7%. In the fourth quarter of fiscal 2026, Snowflake faced a 150-basis-point headwind in its free cash flow margin due to the acquisition of Observe amidst intensified competition from major players such as Amazon and Oracle.
Despite these challenges, Snowflake reported a net revenue retention rate of 125%, with 740 net new customers added in the fourth quarter, a 40% year-over-year increase. The company has made significant strides in its AI product offerings, with more than 2,500 accounts adopting Snowflake Intelligence within three months of its launch and over 4,400 customers utilizing Cortex Code.
For fiscal Q1 2027, Snowflake projected product revenues between $1.262 billion and $1.267 billion, reflecting a 27% year-over-year growth. However, the operating margin is expected to be 9%, and the Zacks Consensus Estimate for revenue stands at $1.32 billion, suggesting a possible slowdown in earnings growth as estimates have recently been revised downwards.
