Snowflake Stock (SNOW) Drops on Earnings as Analysts Raise Price Targets

Snowflake's stock price (NYSE: SNOW) is sharply lower this morning, despite reporting third-quarter fiscal 2026 earnings that surpassed analyst expectations. The market reacted negatively to the company's future growth projections, overshadowing otherwise positive financial results.

Following the earnings release, Snowflake's stock experienced a pre-market drop of approximately 9%, trading around $241. This downturn occurred despite a wave of positive revisions from Wall Street analysts, many of whom raised their price targets on the stock.

The company's Q3 performance included a 28.4% year-over-year increase in revenue, reaching $1.21 billion, exceeding estimates of $1.18 billion. Product revenue specifically grew by 29% to $1.16 billion. Non-GAAP earnings per share (EPS) also exceeded expectations, coming in at $0.35 compared to the consensus estimate of $0.31. However, the market fixated on the fourth-quarter product revenue growth forecast of 27%, a slight deceleration from the previous quarter's 29% and below some investor expectations.

Analysts Shuffle Price Targets on SNOW

In response to the earnings, several analysts reiterated or upgraded their outlook on Snowflake, signaling strong confidence in the company's fundamentals and future prospects.

DA Davidson maintained a “Buy” rating and increased their price target to $300, citing sustained momentum in the core business, as well as in newer AI/ML and data engineering categories. Similarly, Evercore ISI raised its price target to $300 from $280, highlighting the “solid” fiscal Q3 results and a promising Q4 outlook indicative of durable growth.

Cantor Fitzgerald increased its price target to $278, emphasizing Snowflake's strong position to capitalize on secularly-driven AI spending. Morgan Stanley also raised its price target, to $299 from $272, keeping an “Overweight” rating, noting that strong bookings and a “robust” Q4 outlook suggest demand “remains healthy,” despite the slower product revenue growth.

Wedbush maintained its “Outperform” rating and $270 price target, suggesting investors should buy on any weakness in shares. KeyBanc raised its price target to $285, noting a solid Q3 product revenue beat and strong bookings driven by large expansion deals, remaining positive on Snowflake's ability to benefit from organizations' AI initiatives.

Anthropic Partnership Extension Does Little To Stem Tide

Adding to its AI capabilities, Snowflake also announced a $200 million multi-year partnership with Anthropic to integrate Claude AI models into its platform to further enhance Snowflake's AI offerings and potentially drive future growth.

Despite the positive analyst sentiment and strategic advancements, the market's immediate reaction was driven by concerns over the slightly decelerating product revenue growth. The stock's performance in the coming weeks will likely depend on how investors weigh these growth concerns against the company's strong fundamentals and its expanding presence in the AI space, with the company's stock trading up 68.24% YTD leading in to today's pullback.