Cloud database software company $Snowflake (SNOW.US)$ will announce its third-quarter performance after post-market trading on November 20, Eastern Time.

According to analysts' average expectations, the company's Q3 revenue is expected to reach $0.88977 billion, a year-on-year increase of 22.4%, with an eps of $0.15, a decrease of about 40% year-on-year.

So far this year, Snowflake's stock price has fallen over 36% due to its slowing revenue growth. For example, in the third quarter of last year, the company's revenue growth rate reached 32%.

However, during the second-quarter earnings call, Snowflake raised its revenue guidance for fiscal year 2025 because the company continues to attract businesses to its ai-driven cloud platform. The company currently forecasts product sales for fiscal year 2025 to be $3.36 billion, up from the previous estimate of $3.3 billion.

In recent quarters, Snowflake has been heavily investing in developing its own large language model, Snowflake Artic. The company is collaborating with Meta (META.US) to integrate the latter's Llama model and enhance customer engagement on its cloud platform. Analysts say that Snowflake's expanding ai product portfolio could reignite revenue growth and improve customer retention.

Copying Palantir's path to success?

Brian White of investment firm Moness, Crespi, Hardt & Co. upgraded his rating from "neutral" to "buy," with a target price of $140.

In a research report, White wrote: "For us, the hype of the AI era in 2023 has proven to be the revenue 'illusion' of the software industry in 2024, which is not surprising. However, we believe that in the next 12-18 months, the industry and snowflake will begin to see incremental activity from this long-term trend."

The company's stock price fell 15% after the second-quarter financial data was released. Despite profits and revenue exceeding expectations, the stock price plummeted due to pressure on operating margin. The company was also affected by a significant data breach incident in early 2024, when a large amount of user data from AT&T (T.US) and live nation entertainment (LYV.US) was stolen.

But White wrote that the stock's decline this year provides an attractive entry point, as the company can continue to grow.

Analyst Louie DiPalma from William Blair gave a "outperform" rating. He noted that snowflake is the closest competitor to software company palantir (PLTR.US).

DiPalma gave palantir an "underperform" rating, despite the company reporting better-than-expected third-quarter results. The analyst stated that the strong performance of competitors, combined with the decline in stock price, could be a good sign for snowflake ahead of its earnings report.

DiPalma wrote: "Palantir's market cap is $118 billion, while snowflake's is $38 billion, but snowflake has higher revenue ($3.5 billion, compared to $2.8 billion for this fiscal year), and in the same data analytics end market, snowflake's growth rate is also comparable."

Editor/ping