Snowflake’s Stock Plummets on Weak Margin Forecast Despite AI-Driven Revenue Growth
Snowflake shares tumbled over 10% Thursday after the cloud data analytics firm issued a disappointing operating margin forecast of 7% for Q4, below both its prior 9% guidance and Q3's 11% performance. The selloff occurred despite the company beating analyst estimates with $0.35 adjusted EPS and $1.21 billion revenue, representing 29% YoY growth.
Wall Street expressed concern about Snowflake's rising AI investment costs compressing profitability, with Oppenheimer noting short-term pressure while maintaining an $295 price target. The paradox of strong AI-driven demand clashing with margin erosion highlights the capital intensity of enterprise AI infrastructure development.