Snowflake’s (SNOW) AI push has put it on a collision course with Databricks, and it’s getting crowded.
In its latest earnings for fiscal Q1 2026, the cloud data company posted product revenue of $996.8 million — up 26% year-over-year — and a net revenue retention rate of 124% as of April 30.
But the strong financials may not be enough to widen the gap with Databricks, according to Morningstar equity analyst Luke Yang, who sees “intensifying competition” between the two.
While Snowflake is built for business analytics and Databricks for machine learning, Yang notes both are now converging toward the same goal: becoming the one-stop shop for enterprise data needs.
That overlap is getting more direct. In June 2024, Databricks acquired Tabular — a company founded by the creators of Apache Iceberg — just as Snowflake rolled out support for Iceberg the same month.
Then, after Snowflake announced a partnership with Anthropic to integrate the Claude LLM, Databricks added Claude to its own platform just four months later.
The result, Yang wrote, is “an increase of tit-for-tat competition between the two.”
No clear winner yet, but pressure is building
“At the moment, we don’t think there is a clear winner between Snowflake and Databricks,” Yang said. “But we believe the intense competition could take a toll on Snowflake’s future margin expansion.”
Yang credits Snowflake’s early lead in commercializing a cloud-agnostic data lakehouse for much of its growth, particularly as more organizations adopt a multicloud storage strategy.
Snowflake’s SaaS model also sets it apart from most competitors, including Databricks, which follow a PaaS approach.
That difference, Yang says, makes Snowflake easier to adopt since it removes the need for customers’ IT departments to build custom applications or manage infrastructure.
As Snowflake shifts closer to becoming a full data platform, Yang warns the sector is evolving so quickly that the company’s long-term position remains far from secure.
That hasn’t scared off bulls like Josh Brown, CEO of Ritholtz Wealth Management, who recently told CNBC that Snowflake is one of his favorite stocks.
He noted that more than 600 of the company’s customers now spend at least $1 million annually, a revenue segment that grew 27% in Q1.
Meanwhile, Snowflake is expanding its brand visibility outside of tech.
Last week, the company announced it had been named the Official Data Collaboration Provider for the 2028 Summer Olympics and Team USA.
The partnership will help Team USA centralize and share critical data, including athlete training, health, and nutrition, while also powering fan engagement efforts during the LA-based games.
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