Snowflake Q3 FY26 Earnings Preview: AI Data Cloud, Crowded Longs, and a 10% Implied Move

TL;DR / Headline Signal

Snowflake reports Q3 FY26 results this evening, December 3, after the close. Front-week options tied to the December 5 expiry are pricing roughly a 10% move off a stock in the high-$250s via the at-the-money straddle.

The balance of fundamentals, options positioning, and sentiment points to:

A likely beat on headline revenue and non-GAAP EPS.
A bias to the upside in the post-earnings move, with an expected swing of about 11% versus the current price—slightly above what the straddle implies.
The market effectively assuming firm, AI-backed guidance, with product growth still in the high-20s percent range.

The setup looks like bullish but hedged longs in a name where valuation is already discounting a strong AI Data Cloud story. Guidance and tone around AI monetization are the swing factors.

Setup / What the Street Expects

For this quarter (fiscal Q3 2026, quarter ended October 31, 2025):

Consensus revenue is roughly $1.18B, implying about mid-20s percent growth year on year.
EPS expectations cluster around low-30-cent non-GAAP.
In the prior quarter, Snowflake delivered around $1.14B in revenue with product revenue up just over 30% YoY, and EPS ahead of expectations.

Management previously guided:

Product revenue in the low-$1.1B range for Q3 with high-20s to low-30s growth.
Non-GAAP operating margins around high single digits for the full year.

Given a market cap in the mid-$80B’s and a trailing price-to-sales ratio near 18×, the bar for what counts as “good” is high. Traders are likely to treat the following as a true win:

Product revenue landing at or above the high end of internal expectations.
Stable or improving non-GAAP margins.
Evidence that AI-related workloads (Snowpark, Cortex, and related services) are contributing visibly to growth.
Full-year product revenue and margin commentary that at least holds prior targets, if not nudged higher.

Anything that hints at a meaningful deceleration in product growth or a softening of the AI narrative risks being treated as a de facto miss, even if headline EPS or revenue technically come in above consensus.

Fundamentals & Filings

On core fundamentals, Snowflake still looks like a classic high-growth, high-multiple platform:

Market cap is around $85B, with the stock roughly 7% below its 52-week high and more than 70% above its 52-week low.
TTM revenue growth sits just under 30%, with year-on-year revenue growth of similar magnitude.
Gross margins are in the mid-60s percent—healthy for a cloud data platform.
Profitability on a GAAP basis remains negative:
- TTM EPS is about -$4.15, with net profit margins around -33%.
- Return on equity and assets are negative, reflecting heavy investment and stock-based compensation.
The balance sheet is serviceable:
- Debt-to-equity just over 1.1,
- Current and quick ratios in the 1.4–1.5 range,
- No dividend.

From the last reported quarter and recent investor materials:

Product revenue was just over $1.09B, up ~32% YoY, with a dollar-based net revenue retention rate around 125%.
Remaining performance obligations were in the mid-$6B range, growing low-30s percent year on year, signaling solid forward demand.
Management tightened or lifted full-year product revenue and margin expectations, while repeatedly framing Snowflake as the platform for AI-era data and applications.

Recent press releases and IR updates continue to lean into:

The AI Data Cloud branding.
Expanded AI and application-building capabilities (Cortex, Snowpark, app frameworks).
Partnerships that move more enterprise data into Snowflake’s orbit, such as deeper ties with large application and ERP vendors.

Netting it out, the business still looks like a high-quality, high-growth compounder with a credible AI angle and a valuation that demands continued execution.

Options & Tape Diagnostics

The options snapshot tied to this preview is stamped around 2025-12-02T19:51:39Z, with the stock at $260.75. The chain includes 1,756 contracts across expiries.

Chain-wide positioning

Across all expiries:

Call open interest: about 252.6k contracts.
Put open interest: about 211.7k contracts.
Put/call OI ratio: roughly 0.84 (mild call tilt).
Today’s call volume: about 45.6k contracts.
Today’s put volume: about 17.4k contracts.
Put/call volume ratio: about 0.38, implying nearly three-quarters of the day’s flow is in calls.

So positioning and flow both lean bullish, but there is still substantial downside interest rather than pure euphoria.

Event-week expiry and implied move

The key earnings-anchored expiry is the December 5, 2025 weekly, the first Friday after the report:

This expiry carries around 35.5k contracts of open interest (roughly 7.5% of total OI).
It traded about 19.5k contracts in today’s session, roughly a third of total options volume.

At the 260 strike, closest to spot:

The call mid is about $13.93.
The put mid is about $13.20.
The combined straddle costs about $27.13, implying a ~10.4% move versus the $260.75 reference level.

For context, the 30-day realized volatility on the stock is around 37% annualized, which would normally correspond to something closer to a 4–5% move over a few trading days. The earnings straddle is therefore priced at roughly 3–4× recent realized volatility—typical for a name that has a history of double-digit earnings reactions.

Skew and wings

Within the same event-week expiry:

The at-the-money implied volatility around the 260 line is roughly 142% annualized.
A 25-delta call sits near the 287.5 strike, with implied volatility a touch below that level.
A 25-delta put sits near 240, with implied volatility a bit above the at-the-money.

That configuration translates into:

Slightly richer downside versus upside (puts trade a couple of volatility points over comparable calls).
Wings priced a bit higher than the at-the-money, with the tilt favoring downside hedging.

In practice, the skew reads as bullish but cautious: traders are paying up for protection against a negative surprise while leaning long the story overall.

Strike-by-strike open interest around the event

Within the December 5 expiry, open interest is concentrated at:

240: about 2.6k contracts.
280: about 2.5k contracts.
250: about 2.2k contracts.
262.5: just under 2.0k contracts.
270 and 230: around 1.6k each.
Meaningful stacks also appear at 200, 175, and 282.5.

This creates:

A support zone in the 230–250 corridor where put and mixed interest is heavy.
A resistance/target band in the 275–285 area where upside calls cluster.
A potential pin corridor near 250–262.5 if the actual move underwhelms the current implied swing.

Longer-dated and unusual activity

Looking across expiries:

The heaviest single OI bucket is January 16, 2026, with about 128k contracts.
December 19, 2025 carries about 71k.
January 15, 2027 has more than 62k contracts of LEAP interest.

This indicates that larger players are active not just in the event week but across December and the next couple of years, expressing a view that extends beyond a single print.

The “unusual activity” subset shows:

Heavy call buying in December 19 upside strikes around 275, 295, and 310, with several thousand contracts trading against much smaller open interest.
Aggressive flow in the December 5 265 calls, where volume meaningfully exceeds open interest.

Put together, the tape suggests:

A directional bias to the upside, expressed via near-dated and month-out calls.
Ongoing interest in multi-month and LEAP structures, consistent with a longer-term AI platform thesis.
Enough downside put demand to keep skew honest and acknowledge the risk of a guide-down or macro shock.

Sentiment: Bullish but Valuation-Aware

On the sell-side, the tone is broadly constructive:

Many coverage lists still carry buy or overweight ratings, with average targets in the mid-$260s to low-$270s, not far above spot.
Recent previews frame this print as a key software/AI event, focusing on:
- Whether product growth can hold near the high-20s to low-30s,
- The trajectory of remaining performance obligations,
- And concrete signs that AI workloads are moving from experimentation to scaled, revenue-bearing deployments.

Recent news flow reinforces the AI narrative:

Press releases continue to emphasize the AI Data Cloud positioning and the expansion of AI-oriented tools and integrations.
Investor-facing materials highlight customer counts among large enterprises, strong retention, and deepening use of Snowflake as a central data and AI platform.

On social and retail channels:

The name appears frequently on earnings watchlists and AI stock threads.
There is active call buying chatter, especially in short-dated “lotto” calls around the high-$260s to $280 area.
Skepticism tends to center on valuation rather than the quality of the business; even critical posts often concede that the product is strong.

Overall, sentiment is positive and engaged, with awareness that expectations are high and the stock has already run significantly year to date.

Guidance Scenarios

Because the options are so expensive and the multiple is rich, the reaction will likely depend more on guidance and AI commentary than a penny or two of EPS.

Base case

A reasonable central scenario:

Product revenue lands near or slightly above the high end of internal expectations, keeping growth in the high-20s percent zone.
Non-GAAP operating margins are stable to slightly better, reinforcing a path to expanding profitability.
Full-year commentary reaffirms or edges up product revenue and margin targets.
AI workloads get quantitative airtime—for example, growth in AI-related consumption or customer counts.

In this case, a move within or slightly beyond the implied 10% band to the upside—toward the 275–285 region where calls cluster—looks plausible.

Bull case

An upside surprise scenario could include:

Product revenue growth that remains at or above 30% YoY.
A clear raise to full-year product revenue or margin guidance.
Strong AI metrics (for example, AI workloads representing a rapidly growing share of total compute, with compelling case studies).

In that world, chasing through the call wall into the 290–300 area is on the table, and the current straddle pricing could end up underestimating realized volatility.

Bear case

On the downside:

Product revenue comes in near the low end of internal expectations or misses consensus.
Guidance implies a meaningful step-down in growth, pointing toward low-20s percent or worse.
AI commentary is heavy on vision but light on monetization, or hints that competitive pressure from hyperscalers is biting harder than expected.

Here, a move down into the 230–240 support band where put interest is dense becomes very realistic, with the potential for additional downside if the broader software/AI complex is weak around the same time.

Trade Framework

The following structures illustrate how some traders might align with the current setup. They are not advice, but examples of how to express different views given the tape.

1) Directional upside within the implied move

View: the company delivers a clean beat with firm guidance, and the stock trades into the high-$270s or low-$280s.

One possible approach in the December 5 expiry:

Long a 260 call and short a 280 call as a vertical spread.

This targets the upper half of the implied move band, caps risk at the premium paid, and leans into the heavy call interest above spot without paying for extreme tails.

2) Vol-crush expression with a wide range

View: the implied ~10% move is rich; the print may be noisy but ultimately lands the stock inside a broad range.

An illustrative structure:

Short a put spread below the 230–240 support area (for example, short 230 puts and long 210 puts in December 5).
Short a call spread above the 290–300 region (for example, short 295 calls and long 315 calls).

This kind of iron-condor style approach collects premium from the elevated event-week volatility while defining risk outside levels that would likely require a more extreme outcome than the current consensus.

3) Medium-term continuation via diagonals

View: regardless of the immediate reaction, the multi-month AI platform story has runway.

One way to reflect that:

Long a March 2026 or January 2026 out-of-the-money call (for example, a 280 strike).
Against that, short a nearer-term call (for example, a December 19 call in the high-$280s/low-$290s) to help finance the position.

This keeps exposure to a longer-term bullish path while taking advantage of richer near-term implied volatility.

4) Cautious bullish stance via downside spreads

View: constructive longer-term but aware that a guidance wobble could send the stock into the mid-$230s.

Example:

Short a 240 put and long a lower-strike put (for example, 215 or 220) in a later December or January expiry.

This structure is effectively a paid “buy-the-dip if it gets there” stance, centered around an area where the chain already shows heavy put interest and potential support.

Risks & What Could Break the Thesis

Several things could undercut an otherwise constructive setup:

Guidance reset

A meaningful downshift in growth or margin expectations would challenge the multiple and likely push the stock well beyond the lower edge of the implied move band.
AI hype-to-reality gap

If AI workloads still look more like pilots than scaled revenue, and management does not provide concrete metrics, some of the AI premium embedded in the stock and in the call skew could compress quickly.
Macro and sector shocks

A risk-off turn in high-multiple software or growth assets around the print can overwhelm company-specific fundamentals, dragging the stock lower even on a decent report.
Positioning overhang and “sell the news”

With the stock already strong year to date and calls crowded above spot, a solid but not spectacular report could still produce a flat or negative reaction as investors reduce exposure.
Options market mispricing

The straddle may be underestimating the potential for a very large move if guidance or the macro backdrop diverges sharply from expectations; that would leave short-vol structures exposed.

Taken together, the evidence points toward a high-stakes print where a beat with firm guidance and credible AI traction favors an upside resolution, but where rich expectations and crowded positioning mean even a “good” quarter has to be genuinely convincing to justify the current price and the cost of optionality.

Earnings Prediction