Snowflake F1Q Preview: Product revenue upside and CoCo adoption trends are the key catalysts

Overview

This report is Bank of America's preview of Snowflake ahead of F1Q27 earnings, which will be released after the close on May 27. The core view is that the magnitude of Product revenue upside, the adoption trend of Cortex Code, and the upcoming Summit and investor meeting will determine the market reaction in the near term. BofA maintained its Buy rating and raised the target price from $195 to $205.

Core views

BofA remains constructive on SNOW and believes Product revenue has room to beat both BofA's and the Street's expectations. If the upside reaches 2.4%, matching the prior quarter, F1Q27 Product revenue growth could approach 30%; if it reaches the 3.0% blue-sky scenario, growth could rise to around 30.7%. The report also emphasizes Snowflake's competitive advantages in cloud data warehousing, multi-cloud interoperability, its enterprise customer base, and traction in the AI software market.

Analysis framework

The report forms its judgment by combining three lines of evidence: first, it uses Similarweb web traffic and engagement data to assess demand momentum; second, it uses the regression relationship between page views and net new Product revenue over the past 12 quarters to estimate revenue; third, it performs scenario analysis on the degree to which Product revenue has beaten the midpoint of guidance over the past four years, and cross-checks this against management's conservative and consistent guidance style.

Methodology notes

• Alternative data analysisSimilarweb web traffic regression

  Correlation between web visits and Product revenue

  The report believes Snowflake's total web traffic has a 78.6% correlation with quarterly net new Product revenue over the past 12 quarters, and uses the regression equation y=3,030x+4,595 together with F1Q27's 29.2 million page views to estimate Product revenue of about $1.31 billion.

• Earnings scenario analysisProduct revenue beat magnitude scenarios

  2.0%, 2.4%, and 3.0% beat scenarios

  The report compares the growth outcomes when Product revenue beats the midpoint of guidance by 2.0%, 2.4%, and 3.0%, and believes 2.4% is in line with last quarter, while 3.0% is a blue-sky scenario that could provide a positive catalyst.

• Valuation methodCY27E revenue multiple

  Target price based on 10.3x CY27E revenue

  The $205 target price is based on 10.3x CY27E revenue, at a premium to the 4.9x multiple for infrastructure software peers, primarily reflecting Snowflake's growth resilience and the AI software market opportunity.

• Quality and financial frameworkBofA iQmethod

  Business Performance, Quality of Earnings and Valuation Toolkit

  The report includes BofA's standardized iQmethod framework to keep business performance, earnings quality and valuation comparisons consistent.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SNOW.US

  Core coverage name

  Strengths

  First-mover advantage in cloud data warehousing, multi-cloud interoperability, enterprise customer base, ability to expand across multiple workloads, and traction in the AI software market.

  Weaknesses

  Valuation is at a premium to large-cap software peers, and the consumption-based revenue model may lead to greater revenue volatility.

  Comparison

  The target price is valued at 10.3x CY27E revenue, above the 4.9x for the infrastructure software group, with the premium driven by growth resilience and the AI software TAM opportunity.

  Risks

  Macro and IT spending uncertainty, quarterly revenue misses, consumption-model volatility, intensifying competition, and insufficient execution on the product roadmap.

• Product revenue

  Key earnings driver

  Strengths

  Both the web traffic regression and the historical beat trend point to upside in F1Q27, and 2.4% or 3.0% beat scenarios could support roughly 30%-31% year-over-year growth.

  Weaknesses

  The recent beat magnitude has compressed from 5.1% to 2.7% and then 2.4%; further compression would weaken revenue visibility.

  Comparison

  F4Q26 Product revenue grew 30.0% year over year; if F1Q27 reaches the 3.0% beat scenario, growth could rise to about 30.7%.

  Risks

  If it comes in below the 2.4% beat from last quarter, the market may interpret that as demand deterioration.

• Cortex Code

  Potential FY27 growth catalyst

  Strengths

  Customer adoption has reached 50%, and early adopters are consuming 11% more than the control group, which may strengthen the AI software demand narrative.

  Weaknesses

  Current disclosure is still early, and future revenue contribution and sustained consumption uplift remain to be proven.

  Comparison

  Compared with traditional data warehouse growth drivers, CoCo represents Snowflake's expansion into AI-native workflows and agent tools.

  Risks

  If the Summit or earnings call does not provide new adoption data, the catalyst strength may be weaker than expected.

Key data

• Target price$205Raised from the previous $195.
• Current share price$164.24The price listed in the stock data within the report.
• Investment ratingBuyBofA maintains a Buy rating on SNOW.
• F1Q27 Product revenue regression estimate$1.31 billionThis corresponds to 31.5% year-over-year growth and implies a 3.6% beat versus the midpoint of guidance.
• BofA F1Q27 Product revenue forecast$1.265 billionUp 26.9% year over year, 0.2% below the Street's $1.268 billion.
• Web page views29.2 millionTotal page views used in the F1Q27 regression estimate.
• Correlation between web traffic and net new Product revenue78.6%Based on the past 12 quarters.
• April SNOW total page views10 million, +20.1% YoY, -4.7% MoMMarch grew 37.2% YoY and 20.6% MoM.
• April SNOW engaged visits1.9 million, +33.2% YoY, -2.5% MoMMarch grew 44.1% YoY and 20.5% MoM.
• Cortex Code adoptionUsed by 50% of customers, with 11% higher consumption among early adoptersCompared with the control group, supporting AI-related demand signals.
• Historical average Product revenue beat3.8%The average over the past 16 quarters; 10 of the past 16 quarters were 3%+.
• Short interest changeSNOW is up 39% year to dateBelow the 44% rise for infrastructure software peers overall, which the report interprets as relatively less bearish sentiment.

Impact & implications

If the F1Q27 Product revenue beat remains at or above 2.4%, the market may regain confidence in Snowflake's ability to sustain 30%+ revenue growth; if it reaches 3% or more, it could become an earnings catalyst. Conversely, if the beat compresses further and falls below 2.4%, it may be viewed as a sign of weaker demand visibility or deteriorating demand, pressuring sentiment.

Risks

• If the Product revenue beat versus the midpoint of guidance falls below 2.4%, it may signal weaker demand visibility or deteriorating demand.
• Although the CRO transition will be handled by a senior internal executive, it may still bring risks related to sales execution, customer segmentation, product-sales priorities and incentive changes.
• Snowflake recognizes revenue based on actual consumption, which may lead to greater quarterly revenue volatility than the traditional subscription model.
• The company's valuation carries a premium to large-cap software names and infrastructure software peers, so any weakening in macro or IT spending sentiment could lead to a sharper valuation pullback.
• Competition comes from next-generation DBMS vendors, public cloud vendors and legacy DBMS vendors; insufficient product roadmap execution could slow or reverse share gains.

What to watch

• The actual F1Q27 Product revenue reported after the close on May 27 and the beat versus the midpoint of guidance.
• Whether Product revenue growth can maintain or exceed 30% year over year.
• New Cortex Code adoption, customer consumption and commercialization data points.
• Product features, partnerships and long-term AI strategy commentary at the June 2 Summit investor meeting.
• How the new CRO Jon Beaulier describes the sales organization, customer segmentation, product-category priorities and growth areas.
• Whether management continues its consistent and conservative guidance approach, and whether it gives any signal about changes in demand trends.