Snowflake (NYSE:SNOW) is all set to report its fiscal second-quarter 2027 earnings on Wednesday, September 2. The stock has a history of exceeding Wall Street expectations, and investors also seem positively hyped around the data and analytics software segment this time around.
On August 31, Cantor Fitzgerald analyst Thomas Blakey raised the price target on Snowflake Inc. (NYSE: SNOW) to $405.00 (from $282.00) while maintaining an Overweight rating. The firm believes Snowflake will experience another beat this quarter, and while this may sound bullish, it isn’t really so when the beat is likely to be narrower than last quarter.
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AI is adding to Snow’s Consumption
Snowflake had a strong start for fiscal 2027, with product revenue up 34% year-over-year (YoY) to $1.3 billion, while net revenue retention (or NRR) reached 126% as of Q1. Artificial Intelligence was a big part of SNOW’s revenue, helping push product revenue up 34% year-over-year.
Snowflake’s AI capabilities were being used by more than 13,600 accounts, while Cortex Code was being used by around 7100 accounts. Snowflake’s CoCo, or Cortex Code, is the company’s AI coding agent for data teams. The tool launched back in November 2025 and has since added more than 4,000 users.
Based on Cantor’s checks, CoCo adoption remains strong in Q2, along with strong core usage and continued cloud migrations.
A Narrower Beat
While Snowflake benefits from strong trends in data layer spend consolidation, this could also be a bear case if customers use consolidation projects to optimize spending. The key question is therefore whether incremental AI consumption can offset cost optimizations customer pursue as they consolidate spending.
More importantly, Cantor’s note holds a number that isn’t obvious at first, but could change the narrative for Wall Street. The note says that Snow’s product revenue is projected to beat the guide mid-point by 3%. This is a narrower beat than last quarter’s 5.5%. The bear case therefore lies in upside being narrower than Q1’s, making strong execution insufficient to surprise investors.
Analysis and Bottom-line
Hedge funds are seen to be leaning into SNOW’s story. According to Insider Monkey’s database tracking more than a 1000 hedge funds, 103 hedge funds held positions in the stock, up from 80 in the prior quarter.
Overall, Cantor’s note shows that Snowflake’s problem isn’t related to earnings execution. Rather, the question is whether the stock delivers a beat strong enough to surprise Wall Street.
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