Story Stocks^®

Snowflake (SNOW) delivered a strong 3Q26 beat with product revenue up 29% yr/yr to $1.16 bln, but shares sold off sharply amid light Q4 guidance, profit-taking after a 75% YTD rally, and valuation concerns with a 1-year forward P/E north of 160x. FY26 product revenue guidance was raised to $4.446 bln (28% growth), though Q4 implies 27% growth at $1.195-$1.200 bln compared to 29% growth in Q3, and non-GAAP operating margin of 7% versus Q3's 11%.

• The Q4 slowdown is tied to discounts on large, long-term deals with lagged revenue impact, raising competition/macro worries, especially in light of peer MongoDB's (MDB) recent beat-and-raise performance.
• Remaining performance obligations (RPO) accelerated 37% to $7.88 bln with net revenue retention steady at 125%, reflecting record 615 new customers and four nine-figure deals.
• RPO acceleration and retention highlight durable expansion, with AI influencing 50% of new logos and 28% of use cases amid a $100 mln AI revenue run-rate achieved early, driven by 7,300+ weekly AI users and Snowflake Intelligence adoption by 1,200 customers.
• AI innovations like Cortex AI, Snowpark, and Snowflake Intelligence enable agentic workflows across data lifecycles, powering use cases at Fanatics (fan data unification) and TS Imagine (trading automation equivalent to 8.5 FTEs).
• SNOW's new multi-year $200 mln Anthropic partnership integrates native models with joint go-to-market to accelerate enterprise AI, while an expanded Accenture (ACN) collaboration launches a Snowflake Business Group training 5,000+ pros for faster AI value at customers like Caterpillar (CAT).

Briefing.com Analyst Insight:

SNOW's Q3 showcased AI momentum with RPO acceleration, stable retention, and ecosystem wins (SAP, Google Cloud), but Q4 guidance disappointed on growth deceleration and margin compression, contrasting with MDB's strength and fueling discounting fears. Positives include rapid AI run-rate progress, enterprise-grade reliability (e.g., outage recovery), and partnerships expanding reach, yet a lofty valuation demands proof of consumption ramps and macro resilience into FY27. New CFO Brian Robins' emphasis on efficient growth and customer enthusiasm further bolsters long-term conviction despite near-term headwinds.