🚀 Snowflake simply obliterated the “AI Eating SaaS” narrative yesterday afternoon.

💡At The Pragmatic Optimist, we had a “Strong Bullish” rating on the stock based on our Conviction Scores in the AI Stock Tracker 2.0. But, unfortunately, we never initiated a position in the company.

📈 After a 48% drawdown from the start of 2026 until April this year, the stock is finally turning positive, with an eye-watering 37%+ post-Q1 earnings jump.

1️⃣ During the quarter, Snowflake’s product revenue accelerated 34% YoY, vs. management expectations of a sequential slowdown of 27%, driven by growing adoption of its AI products that include Snowflake Intelligence and Cortex Code.

2️⃣ Second, the company’s backlog also grew at 38% YoY, faster than Product revenue, which is a good sign that enterprise commitment to Snowflake is strengthening. 

3️⃣Third, Net Retention rate also went up 100 basis points sequentially to 126%, which is extremely encouraging as Snowflake’s existing customers are expanding their workloads over time.

4️⃣ Finally, both gross and operating margins also improved, disproving the myth that Agentic AI would pressurize profitability, especially when the M&A calendar has also been quite busy.

💪 To put it all together, the data layer looks to be clearly winning, with Datadog and Snowflake simply wowing investors as they check all the metrics that investors are monitoring to discern between winners and losers in Agentic AI. 

📅 MongoDB is also on deck to report their earnings this evening, and we will publish a more detailed post this weekend on our updated outlook in software.