Snowflake (SNOW) has kicked off its fiscal 2026 on a high note, delivering stellar first-quarter financials. Investors responded enthusiastically, sending the stock up over 11% in pre-market trading following the earnings release.

Despite the macroeconomic uncertainty, Snowflake's business remains solid, and it is showing no signs of a slowdown, as reflected through its growing customer base, consistent product demand, strategic push into AI, and public sector opportunities. Moreover, the data and AI company raised its full-year outlook. All these positives keep Wall Street analysts upbeat about SNOW’s prospects, and analysts see more upside in the stock from current levels.

Snowflake Delivered Solid Growth Across Key Metrics

Snowflake reported Q1 product revenue of $996.8 million, representing year-over-year growth of 26%. Adjusted for the leap year, the growth was even stronger at 28%. This performance showed stability from the previous quarter and alleviated concerns about potential deceleration despite macroeconomic uncertainty.

Supporting its growth is a healthy net revenue retention rate of 124% and a substantial remaining performance obligation of $6.7 billion, up 34% from a year ago.

Snowflake’s customer growth was also impressive. It now has 606 customers generating over $1 million in trailing 12-month product revenue, up 27% from a year ago. Additionally, the company counts 754 members of the Forbes Global 2000 among its clients, representing a 4% annual increase. Overall, in Q1, Snowflake added 451 net new customers, reflecting a 19% rise from the prior year.

The tech company’s adjusted product gross margin was 75.7%, and its adjusted operating margin climbed to 9%, a 442 basis-point improvement from the prior year. Its adjusted free cash flow margin came in at 20%.

Doubling Down on Innovation and AI

Snowflake is doubling down on product innovation, adding new features to support future growth. In Q1, the company launched over 125 new product capabilities, double the number introduced in the same period last year. A significant area of momentum is in open data formats, which are gaining traction across Snowflake’s customer base.

The company’s AI offerings are witnessing solid adoption. As of Q1, over 5,200 accounts used its AI and machine learning weekly.

Snowflake’s Strategic Expansion and Sector Focus

Snowflake is expanding its addressable market through targeted initiatives, such as launching Snowflake Public Sector and obtaining a Department of Defense provisional authorization. This strategic move opens doors to high-value contracts with the U.S. government and defense sectors.

The company is also pushing deeper into industry-specific solutions. Its new automotive offerings, part of its AI Data Cloud for Manufacturing, are gaining traction by driving efficiencies for clients. Snowflake is leveraging AI tools to boost productivity and enhance its customer-facing operations.

Snowflake: A Bullish Outlook and Wall Street Endorsement

Thanks to the ongoing momentum in its business, Snowflake raised its full-year revenue guidance to $4.325 billion, reflecting 25% year-over-year growth. Earlier, management projected FY26 product revenue of $4.28 billion.

Q2 product revenue is expected to fall between $1.035 billion and $1.04 billion, reflecting year-over-year growth of about 25%. Further, operating margin is expected to remain healthy at 8%.

Wall Street remains bullish on Snowflake stock, with analysts maintaining a “Strong Buy” consensus rating. Despite a 40.5% surge in its share price over the past month, analysts see further upside potential. Although shares are now trading above the average price target, the Street high price target of $235 indicates a potential 19% gain.

Conclusion

Snowflake’s strong start to FY26 reflects the solid demand for its offerings despite broader economic uncertainties. With impressive financial results, an expanding customer base, a focus on AI innovation, and expansion into the public sector and vertical-specific solutions, the company is well-positioned for continued growth. Moreover, analysts’ positive sentiment and average price target indicate that SNOW stock has further upside potential.