Snowflake Q2 Preview: Will AI Demand Keep the Story Alive?

Snowflake SNOW, the AI Data Cloud company, reports its Q2 fiscal 2026 results after the market closes on Wednesday, August 27. Analysts forecast non-GAAP EPS of about $0.26 on product revenue near $1.09 billion, up 25% year over year, though growth has continued to moderate from earlier highs. Snowflake is still up 25% year to date. But in the past months, shares have declined nearly 10% reflecting a mix of rising competitive pressure, valuation scrutiny, and signs of investor fatigue as AI-fueled growth expectations remain sky-high.

The Street's main focus will be demand resilience, with product usage and AI consumption in emphasis. In Q1, product revenue surged 26% YoY to $997 million, with RPO climbing 34% YoY to $6.7 billion and net revenue retention at a solid 124%. Investors will scrutinize whether that momentum can persist across broader customer adoption and how the company is monetizing AI.

Margins and profitability will matter just as much. Snowflake guided to an approximate 8% non-GAAP operating margin for Q2 and 75% product gross margin for the full year. In a subscription-heavy model, maintaining margin discipline will be essential as they invest in scaling. Furthermore, Snowflake is not yet GAAP profitable. With recent concerns over cash burn and dilution, investors will be closely watching for continued progress toward profitability.

In the end, it may come down to guidance. Snowflake has raised full-year expectations once already, and if management can show confidence in sustained 25%+ growth, investors could get behind the next phase of the story. If not, the premium multiple could look harder to defend.