Snowflake earnings beat as Goldman Sachs sees AI upside

Snowflake, the cloud-based data platform company that helps companies store, analyze, and share big datasets across public clouds, reported its fourth-quarter and full-year 2026 earnings last week on February 25.The company, best known for its AI data cloud platform that enables application development, data warehousing, and analytics, topped Wall Street expectations, driven largely by accelerating adoption of artificial intelligence.The company stock has struggled in recent months, down 27% this past quarter and 23% year to date. But since reporting a strong quarter with future growth possibilities, despite an early setback, the stock is up 2.3% this past month.Snowflake earnings: revenue and margins beatIn Q4, Snowflake reported $1.23 billion in product revenue, a 30% year-over-year increase, 2% above the Street consensus. With an 11% operating margin that far exceeded the 7% Street estimate, Snowflake also guided to increased product revenue growth in fiscal year 2027.More Tech Stocks:Morgan Stanley sets jaw-dropping Micron price target after eventNvidia’s China chip problem isn’t what most investors thinkQuantum Computing makes $110 million move nobody saw comingSnowflake earnings at a glance:Product revenue $1,227 million, up 30%Total revenue $1,284 million, up 30%Gross profit margin up 72% at $921 millionOperating income at $139 million, up 11%EPS $0.32, up 4% year over year Snowflake's stock is down 22% year to date.Skaffari/Getty Images for Snowflake Goldman Sachs bullish but trims targetIn a note shared with TheStreet, analysts Gabriella Borges, Maura Hager, and Matthew Martino at Goldman Sachs took a deep dive into Snowflake's earnings report.The firm maintains its buy rating after the earnings report, but lowered its price target to $216 from $246.One highlight that stands out as promising, according to Goldman Sachs, is Snowflake’s new offering, Cortex Code.This context-aware AI coding assistant is embedded directly into developer workflows, and since its launch in November 2025, has already attracted more than 4,400 users.Goldman points out that customers found Cortex code efficient, some even suggesting that it compressed “16 workweeks into less than a month.” The code is a good example of Snowflake’s push into AI automation, positioning the company as a platform that manages workflows across the full data lifecycle.The firm also noted broader adoption of Snowflake, underscoring the company’s ability to capture greater wallet share.Snowflake introduced 430+ new capabilities in FY26.Signed a $400 million-plus multi-year deal with a financial services customer (client name undisclosed), the largest in company history.Remaining performance obligations of $9.77 billion, up 42% year over year and 24% quarter over quarter.Given these advancements, Goldman expects to see customer expansion, driven by an increase in higher-spending customers. The firm also noted a pickup in cloud RDBMS migrations catalyzed by AI. And driven by product innovation, it expects to see greater adoption of ML/AI workloads, adding to the existing momentum, as 9,100+ Snowflake accounts already use its AI features, representing 70% penetration of its total customer base.However, analysts are also highlighting certain downsides near term.Iceberg cannibalizing Snowflake’s storage revenueIncreased competition from CSPs and DatabricksAdverse changes in the IT spending or optimization in cloud spendingAnalysts react to Snowflake’s AI momentumCiti analyst Tyler Radke raised the price target to $280 from $270, keeping a buy rating, noting that the Q4 report demonstrated increased AI momentum.Baird lowered its price target from $270 to $210, keeping an outperform rating, but is positive on Snowflake’s growing AI ripples.Truist lowered its target to $240 from $270, keeping a buy rating, saying that while Q4 results topped the consensus, shares traded lower after hours as management had set higher expectations at Q3.Deutsche lowered the target to $230 from $275, keeping a buy rating.DA Davidson analyst Gil Luria raised the price target to $250 from $300, while maintaining a buy rating, commenting on Snowflake's strong Q4 results, in which the Company beat both top- and bottom-line expectations.Luria adds that the company remains an AI winner, isolated from “vibe-coding fears,” and that its conversations with the DEN (developer community) continue to reinforce its status as a critical component of the enterprise AI puzzle, according to TheFly.Related: Bank of America revamps Costco stock price before earnings