By Adam Levine

Data warehousing company Snowflake will report its first-quarter earnings after Wednesday's market close as turmoil rocks the software sector. Over the past six months, the stock is down 29% while the S&P 500 index is up 10%.

But the stock has recently bounced, rising 47% from the bottom on April 10, as the company makes the case that data warehousing could be immune from the disruption that artificial intelligence will bring to the software industry.

Wall Street analysts expect adjusted earnings per share of 32 cents, up from 24 cents the year before, on sales of $1.3 billion, rising by 27%. In unadjusted accounting, Snowflake operates at a loss.

The past year has been a rough one for the software sector. Many investors have become convinced that AI agents will reshape the business. Agents are software that can use an AI model to complete a complex series of tasks from a simple conversational prompt.

In the first place, software customers could use coding agents to build custom versions of software they now purchase, usually via subscriptions based on users. In its earnings call earlier this month, Palantir Technologies said that it had done just that with its customer-relations-management software.

If agents begin to outnumber people on corporate networks, as many analysts are predicting, that would be a direct shot at the per-user fee structure at many software companies, replacing it with a consumption-based charge.

The first bit of good news for Snowflake is that it already has a consumption revenue model, even if its gross margin is lower than that of companies with sales based on users.

Data warehousing takes all of a customer's cloud data that come from many different sources in varied formats, and puts them together into a cleaned, governed source for enterprise data analysis and forecasting. Snowflake has been making the case that not only will its services not be devalued by AI, but they could become essential, as could similar offerings from Alphabet, Amazon.com, Microsoft, and start-up Databricks.

Like human users, agents are going to require access to cleaned and properly governed data. Agents can chew through data analysis much faster than humans can, and this could raise consumption as workloads shift from people to machines.

"We deliver the data foundation enterprises rely on across clouds and across data types with the performance, reliability, and operational simplicity required for mission-critical workloads," CEO Sridhar Ramaswamy said in the company's February earnings call.

"As AI agents become central to how work gets done, those same capabilities become even more valuable because agents are only as powerful as the data they can access and the governance and security that surround it."

Snowflake also is offering its own AI software, including agents. These initiatives are just getting off the ground, and they're beginning to get a little traction. In the third-quarter earnings call, the company said that AI income had reached a $100 million annual run rate.

Write to Adam Levine at adam.levine@barrons.com

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May 27, 2026 01:30 ET (05:30 GMT)

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