SNOW Q3 Deep Dive: AI-Powered Momentum Meets Rising Expectations

Cloud data platform provider Snowflake (NYSE:SNOW) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 28.7% year on year to $1.21 billion. Its non-GAAP profit of $0.35 per share was 12.5% above analysts’ consensus estimates.

Is now the time to buy SNOW? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Snowflake’s third quarter results outpaced Wall Street’s revenue and profit expectations, but the market responded negatively, reflecting concerns about the sustainability of recent growth trends. Management attributed the quarter’s performance to strong enterprise adoption of AI-driven offerings, particularly the rapid uptake of Snowflake Intelligence, and highlighted robust new customer additions. CEO Sridhar Ramaswamy emphasized that AI accounted for a significant portion of bookings, with 28% of all use cases deployed in the quarter incorporating AI. He also acknowledged that a hyperscaler outage affected revenue slightly, but maintained that the company’s core business remained resilient and operationally disciplined.

Looking ahead, Snowflake’s guidance is shaped by continued investment in AI capabilities and a focus on expanding the range of data workloads supported by its platform. Management predicts further growth will be driven by broader AI adoption and ongoing customer migrations from legacy data systems. CFO Brian Robbins noted the company’s intention to balance growth with operational efficiency, stating, “We expect a non-GAAP operating margin of 7% next quarter while maintaining innovation momentum.” Management also cautioned that large customer migrations can be lumpy, and consumption trends will be closely monitored to inform future outlooks.

Key Insights from Management’s Remarks

Management cited rapid adoption of AI-powered features, growth in large enterprise customers, and deeper product integration as key drivers behind the quarter’s performance. They also discussed product expansion and strategic partnerships as meaningful contributors.

• AI adoption accelerates: Snowflake Intelligence, the company’s new agentic AI solution, saw the fastest ramp in adoption in company history, now used by over 1,200 customers. Management highlighted that 28% of all use cases deployed last quarter incorporated AI, and AI-influenced bookings accounted for 50% of deals signed.
• Record new customer wins: The company added more than 600 new customers, with AI capabilities playing a prominent role in attracting new logos. Management noted that tailored proofs-of-concept leveraging AI helped convert prospects by demonstrating direct business impact.
• Strategic partnerships expand reach: New and expanded partnerships with SAP, Workday, Splunk, Palantir, and Anthropic deepened Snowflake’s integration with mission-critical business applications, supporting broader data collaboration and AI model availability.
• Product innovation pace quickens: The company launched 370 generally available product capabilities this year, a 35% increase over last year, including enhancements to core data ingestion (OpenFlow), security, and AI features tailored to regulated industries.
• Enterprise migration remains a priority: Snowflake advanced its strategy to help customers migrate from legacy data warehouses, including through the acquisition of Datometry’s software migration solution and a pending acquisition of SelectStar to enrich data catalog capabilities. Management sees these moves as critical to accelerating enterprise adoption and AI readiness.

Drivers of Future Performance

Snowflake’s outlook is underpinned by management’s expectation that AI-driven demand and ongoing migration from legacy platforms will sustain growth, though variability in large deal activity and consumption patterns remain key factors.

• Broader AI feature rollout: Management expects continued customer adoption of Snowflake Intelligence and Cortex AI to drive both new business and expansion within the installed base. Early enterprise use cases, such as automating analytics and enhancing customer engagement, are cited as catalysts for increased platform consumption.
• Legacy migration momentum: The transition of enterprise workloads from on-premises data warehouses to Snowflake’s cloud platform is seen as a multi-year growth driver. Recent acquisitions, such as Datometry, are intended to streamline migrations, but management acknowledges that these projects can be unpredictable and may result in lumpy revenue contributions.
• Margin management amid investment: While investing in R&D and sales capacity to capture the AI and data migration opportunity, management remains committed to expanding non-GAAP operating margins. However, they caution that near-term margins could fluctuate depending on the timing of large deals and ongoing investments in product innovation.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) the pace of AI feature adoption across Snowflake’s customer base, (2) the effectiveness of new migration tools and technology acquisitions in accelerating legacy workload transitions, and (3) the impact of major partnerships—particularly with SAP, Anthropic, and global systems integrators—on new business wins. The trajectory of non-GAAP operating margins amid continued investment in innovation will also be a key signpost for sustained profitable growth.

Snowflake currently trades at $244.12, down from $266.19 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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