Snowflake Shares Climb on Q3 Revenue Beat, Expanded Anthropic AI Deal
Company reports 29% jump in product revenue and deepens its AI push with a $200 million commitment to integrate Anthropic's Claude models.
Snowflake Inc. (NYSE: SNOW) shares advanced in trading Wednesday after the cloud data platform posted stronger-than-expected third-quarter revenue and announced a significant expansion of its strategic partnership with artificial intelligence leader Anthropic.
The company reported product revenue of $1.16 billion for the third quarter of fiscal 2026, a 29% increase year-over-year that edged past its own guidance. The robust sales figures were amplified by news of a multi-year, $200 million commitment to integrate Anthropic's advanced Claude AI models directly into Snowflake's AI Data Cloud, signaling an aggressive move to capture a larger share of the burgeoning enterprise AI market.
Investors reacted positively to the dual catalysts. Snowflake's stock, which has seen significant volatility over the past year, rose following the announcements. The company's performance and strategic AI pivot are being closely watched as indicators of its ability to compete with hyperscale cloud providers and other data-focused software firms.
Earnings Beat and AI Ambitions
The third-quarter results provided a much-needed boost, demonstrating sustained customer consumption of its data warehousing and analytics services. The 29% year-over-year growth in product revenue, which constitutes the vast majority of its total revenue, underscores the ongoing demand for sophisticated data management solutions. While the figure surpassed the company's own forecast, it highlights the competitive environment Snowflake navigates.
The more significant development for the company's long-term trajectory is the expanded Anthropic partnership. This collaboration will embed Anthropic's powerful generative AI models, including Claude 3.5 Sonnet, within Snowflake's ecosystem. This integration will be delivered through Snowflake Cortex AI, a fully managed service that allows customers to build and deploy AI applications securely within the Snowflake platform.
According to a joint announcement, the partnership aims to provide global enterprises with a secure and scalable solution for building agentic AI applications. By keeping the models within Snowflake's security perimeter, clients can leverage their proprietary data to build powerful custom assistants and analytical tools without exposing sensitive information.
This addresses a critical barrier to enterprise AI adoption: data governance. “This partnership ensures that our customers can bring the best of what Anthropic offers directly to their data, securely and efficiently,” a company representative noted.
Strategic Implications in the AI Race
The move deepens Snowflake's competitive moat against rivals like Databricks, which has also invested heavily in generative AI. It positions Snowflake not just as a data repository but as a comprehensive platform for developing and deploying intelligent applications. The integration is expected to power new products, including Snowflake Intelligence and Cortex Analyst, designed to facilitate conversational data analysis using natural language prompts.
Analysts see the deal as a crucial step for Snowflake to capitalize on its vast stores of enterprise data. "Snowflake's core advantage is the centralized, governed data its platform holds," noted one analyst from J.P. Morgan in a recent client note. "Layering a top-tier model like Claude on top of that data is the logical and necessary next step to drive the next phase of growth."
With a market capitalization hovering around $85 billion, Snowflake remains a major player in the software industry. However, its stock has been under pressure to justify its high valuation, particularly as revenue growth rates have moderated from their earlier breakneck pace. The company's forward P/E ratio remains elevated at over 150, indicating high investor expectations for future earnings.
A Look Ahead
Looking forward, investors will be focused on the execution of this AI strategy and its impact on consumption revenue. The ability to seamlessly and securely offer powerful AI tools could significantly increase usage of the Snowflake platform, driving product revenue higher. The company's guidance for the fourth quarter and the full fiscal year will be scrutinized for signs that this investment is translating into accelerated growth.
The partnership with Anthropic, a firm at the forefront of AI safety and model capability, aligns Snowflake with a key innovator in the field. As enterprises move from AI experimentation to full-scale production, the availability of trusted, integrated solutions like the one proposed by Snowflake and Anthropic will be critical for gaining a competitive edge.