Snowflake (SNOW) shares took a sharp dive during intraday trading on Tuesday, plummeting 5.03% despite the company announcing a new collaboration with SAP. The unexpected negative reaction from investors raises questions about the market's perception of this partnership and its potential impact on Snowflake's future growth.

Earlier in the day, Snowflake and SAP revealed plans to integrate Snowflake's AI Data Cloud with SAP's Business Data Cloud. This collaboration aims to provide enterprises with faster access to reliable, real-time data for AI applications and improved operational efficiency. The partnership includes the development of SAP Snowflake, a solution extension for SAP Business Data Cloud clients, and SAP Business Data Cloud Connect for Snowflake, enabling bidirectional, zero-copy data sharing between the two platforms.

Despite the seemingly positive news, the market's reaction was decidedly bearish. Several factors may have contributed to this unexpected downturn. Firstly, the timeline for product availability might have disappointed investors, with SAP Snowflake not expected to be available until Q1 2026 and SAP BDC Connect for Snowflake in H1 2026. This extended wait could have raised concerns about Snowflake's ability to capitalize on current market opportunities. Additionally, the collaboration might have sparked worries about increased competition in the AI and data cloud space, potentially squeezing Snowflake's market share or profit margins. Lastly, some investors may have viewed the partnership as a sign that Snowflake needs to rely on established players like SAP to maintain growth, possibly indicating challenges in its standalone business model.