To The Moon

$Snowflake(SNOW)$ is scheduled to report its fiscal fourth-quarter 2026 earnings on Wednesday, February 25, 2026, after the market closes.

The stock enters this report under significant pressure, having declined roughly 15% to 21% year-to-date as of late February. Investors are balancing optimism regarding Snowflake’s AI pivot against concerns over margin compression and aggressive insider selling.

Key Earnings Estimates (Consensus)

Revenue: $1.25 billion (Estimated ~27% YoY growth).

Product Revenue: $1.20 billion (The most critical component of their business model).

Non-GAAP EPS: $0.27 (A projected 10% decline from the $0.30 reported in the same quarter last year).

Implied Move: Options markets are currently pricing in a ±13% swing, significantly higher than the historical 4-quarter average move of 7%.

Snowflake Inc. (SNOW) had 30-Day Implied Volatility (Mean) of 0.7541 for 2026-02-20.

Snowflake’s fiscal Q3 2026 earnings, reported on December 3, 2025, were a classic "beat and drop" event. While the company exceeded analyst expectations on both the top and bottom lines, the stock plunged approximately 8–9% the following day due to a cautious outlook and concerns over long-term profitability.

Q3 2026 Earnings Summary

Snowflake delivered strong consumption-based growth, but market skepticism regarding its high valuation overshadowed the results.

• AI Milestone: A standout highlight was the announcement that Snowflake achieved a $100 million AI revenue run rate a full quarter ahead of management’s internal projections.

• Customer Momentum: The company added 615 new customers, bringing its total to 12,621. Large customers (those spending >$1M/year) grew 29% YoY.

The Lesson Learned: The "Value Trap" of Consumption Models

The market's negative reaction despite the "beat" provided a harsh lesson in how high-growth SaaS stocks are currently being judged.

1. Guidance is the Only Currency That Matters

Despite the Q3 beat, Snowflake’s guidance for Q4 product revenue ($1.195B–$1.20B) implied a slowdown to 27% growth. In a high-interest-rate environment, "deceleration" is a dirty word for a stock trading at nearly 18x–20x sales. The lesson: A current beat cannot save a stock if the forward-looking slope is leveling off.

2. AI Experimentation ≠ Immediate Profits

While CEO Sridhar Ramaswamy touted that AI influenced 50% of bookings and that 28% of use cases now involve AI, this hasn't yet translated into a "hockey stick" for margins. In fact, Snowflake guided for a lower operating margin of 7% for Q4. Investors learned that the AI transition is expensive, requiring heavy R&D and infrastructure investment that eats into the bottom line.

3. The "Discount" Dilemma

Management revealed that growth was partially impacted by discounts offered on large, long-term deals. While this helps lock in market share against rivals like Databricks, it creates a "revenue drag" in the short term. The lesson for investors: Market share gains are currently being "bought" through price concessions, which complicates the path to GAAP profitability.

4. Execution Risk Under New Leadership

This was one of the early full quarters under CEO Ramaswamy. The volatility reflected a "trust but verify" sentiment from the street. Investors are no longer giving Snowflake a "blank check" for growth; they are demanding a clear bridge from AI hype to operating leverage.

Key Metrics to Watch

Investors should look beyond the "beat and raise" to these specific indicators of Snowflake's long-term health:

1. Net Revenue Retention (NRR): Analysts are looking for this to stabilize around 125%. Any dip below this could signal that existing customers are scaling back consumption or moving workloads to competitors like Databricks or Google BigQuery.

2. Cortex AI Adoption: Watch for management's commentary on Snowflake Cortex. With the recent $200 million OpenAI partnership and the general availability of "Cortex Code," investors want to see if AI is driving actual consumption revenue rather than just "experimentation."

3. Remaining Performance Obligations (RPO): The consensus estimate is $8.89 billion. This represents future contracted revenue and serves as the primary indicator for growth in fiscal 2027.

4. Operating Margin Guidance: Q4 guidance originally implied a compression to 7% (down from 9% in Q3). If Snowflake beats this or guides for double-digit margins in FY2027, it could spark a massive relief rally.

Snowflake (SNOW) Price Target

Based on 46 analysts from Tiger Brokers app offering 12 month price targets for Snowflake in the last 3 months. The average price target is $268.44 with a high forecast of $500.00 and a low forecast of $170.00. The average price target represents a 70.33% change from the last price of $157.60.

Trading Analysis: Short-Term Opportunity

The current setup suggests a high-volatility event. Here are the bull and bear scenarios for short-term traders:

The Bull Case (The "Relief Rally")

• The Setup: The stock has been beaten down (-15% in the last month) and expectations for a "beat" have been lowered from 5% to 3%.

• Catalyst: A modest product revenue beat combined with FY2027 guidance in the mid-20% range could trigger a short-covering rally.

• Target: A move back toward the 50-day moving average (~$206).

The Bear Case (The "SaaSpocalypse" Continues)

• The Setup: Heavy insider selling (over $130M in 90 days) and high valuation multiples ($47B+ market cap for an unprofitable GAAP company).

• Catalyst: If NRR continues to slide or if the OpenAI partnership costs are seen as a drag on margins without immediate revenue payoff.

• Risk: A break below the recent support near $165 could see the stock testing the 52-week lows of $120.

Note on Volatility: With a 13% implied move, "playing the direction" is risky. Volatility-based strategies (like Straddles or Iron Condors) might be preferable for those expecting a large move but unsure of the direction, though high "Vega" (volatility) crush post-earnings can eat profits quickly.

Technical Analysis - Exponential Moving Average (EMA)

SNOW is experiencing a sharp decline in recent weeks, and the attempt to make a recovery seem to fail as the AI software selling off still persists. So in order for SNOW to make a recovery move, it need to give a strong guidance and also provide a definitive path to GAAP profitability, that might reverse the RSI momentum from negative to positive.

As of now, SNOW is trading at its low and this might be a good time to look at the share price, so I think I will be monitoring the price action to see how the investors sentiment is like from the volume, we might see some buying volume, if we believe that the fear of CAPEX risk for AI is reducing.

Summary

Snowflake (SNOW) is set to report its fiscal Q4 2026 results on Wednesday, February 25, 2026, after the market closes. The stock enters the print under significant pressure, down approximately 20% year-to-date, as investors weigh its AI transition against compressing margins.

The Numbers to Beat

Wall Street expects a "beat and raise," but the bar for a positive reaction has shifted:

• Revenue: $1.25 billion (Estimated ~27% YoY growth).

• Product Revenue: $1.20 billion (The primary driver of the stock).

• Non-GAAP EPS: $0.27 (Projected 10% decline YoY).

• Operating Margin: Guidance is set at 7%, a drop from 9% in Q3. Investors will be hyper-focused on whether AI investments are hurting profitability more than expected.

Key Metrics & Sentiment

1. NRR Stability: Analysts want to see Net Revenue Retention hold at 125%. Any further slippage would signal that customers are optimizing costs rather than expanding.

2. The AI "Realness" Test: After a $100M AI revenue run rate in Q3, management must prove that the Snowflake Cortex and OpenAI partnership are driving consumption, not just pilot programs.

3. FY2027 Guidance: This is the "make or break" for the stock. Analysts are looking for FY2027 product revenue growth guidance in the mid-20% range (approx. $5.5B–$5.8B).

Short-Term Trading Outlook

Options are pricing in a ±11–13% move, significantly higher than the historical average.

• Bull Case: A "relief rally" could occur if the 7% margin guidance proves conservative and the company guides for double-digit margins in 2027. A push back toward $200 is the target.

• Bear Case: If guidance suggests revenue growth is decelerating toward 20%, the stock could break support at $165 and test the 52-week low of $120.

Lesson for Traders: The market is currently punishing "beats" that come with "cautious guidance." Unless Snowflake provides a definitive path to GAAP profitability alongside AI growth, the upside may be capped by valuation concerns ($170+ represents ~11x forward sales).

Appreciate if you could share your thoughts in the comment section whether you think SNOW could provide a strong guidance and also show that it has a definitive path to GAAP profitability alongside AI growth to trigger a upside move.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.