Prediction: Snowflake's Product Revenue Passes $8 Billion in Fiscal 2028

Snowflake (NYSE:SNOW) gave investors a lot to like on Wednesday. The data cloud specialist's fiscal 2027 second-quarter report featured a third straight quarter of accelerating growth, with a bigger push from its artificial intelligence (AI) products.

Shares jumped more than 20% in extended trading on the news. As of this writing, they trade at about $338.

Management now expects about $6.07 billion of product revenue in fiscal 2027 (the year ending Jan. 31, 2027), or 36% year-over-year growth. It also lifted its full-year non-GAAP (adjusted) operating margin outlook to 14.5% from 13.5%. That's the second guidance raise this year. Snowflake opened the year forecasting 27% product revenue growth, raised the number in May, and now sits at 36%.

Put another way, the company keeps outgrowing its own forecasts. And that puts a bigger milestone within view -- $8 billion of product revenue in fiscal 2028, the following year.

Image source: Snowflake.

What would it take?

Snowflake's product revenue totaled $4.47 billion in fiscal 2026, up 29%. This year's guidance implies 36% growth on top of that.

Getting from this year's $6.07 billion to $8 billion the year after requires about 32% growth. In other words, Snowflake could decelerate by roughly four percentage points next year and still clear the mark.

The recent trend makes that bar look manageable. Product revenue came in at $1.49 billion for the fiscal second quarter (ended July 31), up 37% year over year, after 30% growth in the fiscal fourth quarter of 2026 and 34% the following quarter. Chief financial officer Brian Robins said the acceleration, the company's third quarter of it in a row, came from strength in the core data platform along with a meaningful pickup in AI revenue.

Retention is holding, RPO growth is cooling

The most important number behind that view, I'd argue, is Snowflake's net revenue retention rate (what existing customers spent over the past year compared with what the same group spent the year before). It came in at 126% for a second straight quarter, up from the 125% the company posted at the end of fiscal 2026. Remaining performance obligations (RPO), the contracted business Snowflake hasn't yet recognized as revenue, stood at $9.00 billion, up 30% year over year. That growth rate, though, is down from 42% at the end of fiscal 2026 and 38% last quarter.

At 126%, customers already on the platform are growing their spending fast enough to supply most of the roughly 32% the prediction needs. New business has to cover the rest.

The AI products are a newer source of support. CoCo, the company's AI coding agent, surpassed 9,100 accounts, up more than 2,000 in three months. Snowflake doesn't break out AI revenue in dollars, so investors can't size the contribution precisely. But the adoption numbers, and a forecast that keeps rising, suggest the spending is sticking.

A 27% year would fall short

The RPO trend is the one to watch. Snowflake runs a consumption model (customers buy capacity up front rather than paying a flat subscription fee, and draw it down as they use its cloud computing platform), so revenue follows actual usage. And slowing RPO growth can be an early sign of where that usage is headed.

If growth reverts to the 27% pace management originally guided for this year, fiscal 2028 product revenue lands around $7.7 billion, and the prediction misses.

Worth noting: Snowflake's first fiscal 2028 forecast, which should arrive when this year wraps up early next year, will probably start below 32%. After all, this year's guidance started at 27% and has been raised twice since.

A conservative opening forecast wouldn't kill the prediction. A sliding retention rate or another leg down in RPO growth would.

Ultimately, I expect Snowflake to clear the $8 billion mark. If retention holds, existing customers get the company most of the way there, and management has made a habit of guiding low and raising later. Sure, RPO growth is cooling, and a consumption business can decelerate quickly when customers pull back. But the prediction has room for that -- growth can come down four points from the full-year guide and still land above $8 billion.

Whether the growth stock is a buy at this price is a separate question. After the post-earnings jump, Snowflake is worth about $116 billion, or about 19 times this year's guided product revenue. That sales multiple arguably prices in a couple of years of strong execution already.

The prediction, though, is about the business, not the stock. And the business looks on track.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Snowflake. The Motley Fool has a disclosure policy.