Snowflake earnings support software rerate as product revenue accelerates to 37%

Snowflake Inc (SNOW) reported Q2 FY2027 results after market close on September 2, 2026. The company's AI products generated roughly half of the incremental acceleration, bringing product revenue to 37% growth. Margins expanded, and guidance rose, but the valuation now demands sustained AI-led execution. Snowflake reached 9,100 customer accounts for CoCo and 5,800 for CoWork.

Revenue grew from $1.22 billion in FY2022 to $4.68 billion in FY2026, while levered free cash flow reached $1.12 billion in FY2026. The rerate case suggests Snowflake is becoming a broader data-and-AI platform, with Q3 product-revenue guidance implying around 37%–38% growth, which exceeds prior expectations. The company's net revenue retention stood at 126%, indicating existing customers continue expanding usage.

SNOW traded at $363.74 on September 3, 2026, up 18.93%, with a 51.03% gain over three months and a 119.80% increase over six months. While the earnings signal supports a software rerate continuing due to accelerating growth, higher guidance, better margins, and visible AI monetization, the broader rerate still requires confirmation from other software companies.

Snowflake shows that investors will pay for credible AI acceleration, but not necessarily for every software valuation to receive the same premium.