Snowflake stock (NYSE: SNOW) continued its plunge in the pre-market trading on Thursday, after delivering a textbook “beat-and-drop” performance on Wednesday night.
The 8% pre-market drop came after the company posted its third-quarter results that comfortably topped Wall Street estimates yet failed to satisfy a market hungry for perfection.
The data-cloud giant reported revenue of $1.21 billion, ahead of the $1.18 billion forecast, and beating earnings expectations with adjusted EPS of $0.35.
The sell-off highlights a growing tension for high-flying software names: strong execution is no longer enough when valuations are stretched.
Snowflake stock: Guidance, growth jitters and lofty expectations
The main driver behind Thursday’s pullback is Snowflake’s forward guidance, which landed in “good, but not great” territory.
Management projected fourth-quarter product revenue between $1.195 billion and $1.20 billion, implying year-over-year growth of roughly 27%.
After the stock surged more than 70% this year, many bulls were positioning for a guidance raise that would signal a return to 30%-plus growth, a threshold the company now seems unlikely to cross in the near term.
The dive was propelled by a deceleration narrative as the product revenue growth came in at 29% for the reported quarter, a healthy clip but a tick lower than the blistering pace of previous years.
It reflects a “priced for perfection” setup where any sign of cooling momentum invites an immediate valuation reset, regardless of the underlying operational strength.
The investors even ignored the elephant in the room, a $200 million partnership with AI safety firm Anthropic and highlighted the rapid adoption of “Snowflake Intelligence,” its enterprise AI agent.
What analysts say
Wall Street’s reaction has been one of measured optimism mixed with short-term caution.
Jefferies has reiterated its Buy rating on Snowflake, keeping a bullish $300 price target intact despite recent volatility.
The broker cites Snowflake’s strong positioning in the data cloud market and its potential to benefit as enterprises ramp up AI and analytics spending.
The analysts appear comfortable with the company’s current execution and long‑term growth runway, even as investors scrutinise software valuations.
The consensus view is that while the fundamentals remain intact, evidenced by a robust 125% net revenue retention rate and a 37% jump in remaining performance obligations (RPO), the market was effectively demanding a “beat-and-raise” of a much larger magnitude.
The key question now is whether Snowflake can leverage its deepening AI partnerships to re-accelerate growth in fiscal 2026.
If the new AI workloads begin to drive material consumption revenue, this 8% pullback will look like a brief reset in a longer uptrend.
But until that growth curve bends back upward, the stock may struggle to reclaim its recent highs.
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