AI Momentum Soars… Snowflake Stock Tanks Anyway. Here’s the Make-or-Break Level Every Trader Is Watching

Snowflake delivered the kind of quarter that would normally be labeled “solid” – modest beats, strong bookings, clear AI momentum, raised guidance – but for a stock trading at 160x+ forward earnings, “solid” was never going to cut it. Shares are down roughly 11% in the wake of the report as investors recalibrate what they are willing to pay for 20-something growth and an AI story that is real, but still early. Technically, the stock is now heading into a key test around the $235 level; if that area fails, the next obvious magnet is the 200-day moving average down near $205, where the longer-term uptrend gets a more serious stress test.

On the numbers, Snowflake cleared the consensus bar but not by a margin that justifies its premium. Q3 product revenue grew 29% year-over-year to about $1.16 billion, beating expectations of roughly $1.13 billion but marking a slowdown from 32% growth in the prior quarter. Total revenue of $1.21 billion was modestly ahead of the $1.18 billion LSEG consensus. Adjusted EPS came in at $0.35 versus $0.31 expected, helped by a non-GAAP operating margin in the low double digits and product gross margins just under 76%. Remaining performance obligations climbed 37% to $7.88 billion, with more than $1 billion in net new bookings and a net revenue retention rate of 125% – proof that existing customers are still expanding their spend even as top-line growth tapers.

The underlying business drivers actually looked better than the stock reaction suggests. Management closed a record four nine-figure deals in the quarter, the kind of large, multi-year commitments that speak to Snowflake’s strategic positioning inside large enterprises. Bookings growth accelerated to roughly 50% year-over-year, up from about 30% in the first half, as customers consolidated more data, analytics, and engineering workloads onto the platform. Some of the near-term drag on revenue growth is self-inflicted: Snowflake is offering more favorable pricing on very large or long-dated contracts, which pulls forward bookings but smooths out revenue recognition. A minor hyperscaler outage shaved $1–2 million off revenue, hardly material. For a consumption-name, the story this quarter is that demand is there, but the revenue cadence is a bit lumpy.

AI is now central to that demand narrative. Snowflake hit a $100 million AI revenue run-rate a full quarter ahead of schedule, with management noting that AI influenced roughly half of all bookings signed in Q3. Snowflake Intelligence – its agentic AI layer that lets users interact with data via natural language – is seeing the fastest adoption ramp in company history, with roughly 1,200 customers in just a month of launch. About 28% of use cases deployed this quarter involved AI. The company also announced a $200 million multi-year partnership with Anthropic, bringing Claude models directly to Snowflake’s 12,600 customers, along with an expanded go-to-market effort with Accenture to deploy AI agents globally. It is early days, but Snowflake is moving from “AI optionality” to “AI usage you can actually measure.”

Guidance was the other flashpoint. For Q4, management guided product revenue to $1.195–1.2 billion, implying 27% growth – slightly slower than Q3’s 29% but about two points ahead of consensus heading into the print. Full-year FY26 product revenue guidance was raised to about $4.446 billion, representing 28% growth (up from 27% previously), and margin targets were reiterated: roughly 75% non-GAAP product gross margin, 9% operating margin, and about 25% adjusted FCF margin. Evercore, Citi, and others noted that Snowflake tends to guide conservatively, and that Q4 assumptions look consistent with stable core data-warehouse demand plus early uplift from AI workloads.

The Street’s fundamental take is far more constructive than the tape. Jefferies maintained a Buy and $300 price target, calling Snowflake a top AI pick and highlighting the 37% RPO growth, four nine-figure renewals, and the early AI run-rate as the real story. BofA reiterated its Buy and $310 PT, arguing that Snowflake is becoming a key strategic vendor for enterprise AI and that any topline “inflection” is more of an FY27 event. KeyBanc raised its target to $285, pointing to 50% bookings growth and a Q4 setup that looks “seasonally stronger” than prior years. Citi, despite acknowledging the smallest product beat in a year and slowing growth, said it would be a buyer on the pullback, expecting product growth to re-accelerate back above 30% in Q4 and beyond assuming a typical beat pattern.

So why the 11% drop? Expectations. The stock was up about 70% year-to-date into the print and trades at a multiple more than double that of peers like Datadog and MongoDB. Against that backdrop, a 2–3% revenue beat and guidance for high-20s growth – even with excellent bookings and AI momentum – looks merely “decent.” Investors also have to digest the idea that headline growth may hover in the high 20s while AI and new products scale, rather than instantly snapping back to the 40%+ era.

From here, the story becomes a tug-of-war between fundamentals and positioning. Fundamentally, Q3 reinforced Snowflake’s status as a core data and AI platform with strong bookings, sticky customers, and growing AI monetization. Technically and sentiment-wise, the market is deciding how much it is willing to pay for that package if growth hovers below 30% for a while. The $235 support level will tell you how forgiving investors feel in the short term; a break toward the 200-day near $205 would suggest they want a cheaper entry before betting on Snowflake’s AI flywheel kicking into higher gear.