According to BNP Paribas, Snowflake (SNOW.US) appears to be making headway in its AI monetization efforts, while Salesforce (CRM.US) has stated that its push to broaden AI adoption is still at an early stage.
"On the margin front, although AI revenue comes with lower margins, AI is pulling core workloads, which is favorable for margins," Stefan Slowinski, a senior equity research analyst at BNP Paribas, wrote in a note to investors. "Snowflake also confirmed that, unlike peers, it does not intend to recognize large token pass-through revenue through its AI Gateway product, which should limit margin pressure. AI products such as CoCo are also driving demand for data engineering products, and we saw solid performance from Snowpark in our recent channel checks."
"Overall, we feel Snowflake is still working toward a 3 percentage point beat, with the earlier beats this year coming from the first contribution of CoCo in the first quarter, as well as some other one-off factors in the second quarter," he added.
Meanwhile, Salesforce continues to drive Slack-related revenue higher, but emerging products such as ClaudeForce are not expected to generate meaningful revenue in the near term.
"Slack continues to be a driver of upgrades, with customers moving to higher tiers such as Advanced upon renewal, and new customers entering at higher tiers in order to get Slackbot," Slowinski noted. "Although some parts of the business still face headwinds, Marketing Cloud appears to be performing better, and 'create and close' type deals have also improved, partly driven by purchases from AI-first customers."
"Overall, Salesforce remains strong in areas such as Slack, Data360 and Agentforce, but it continues to characterize AI adoption as early, with pricing still evolving," he added. "Given the importance of fourth-quarter annual contract value (ACV), we believe the trend for the software industry this year will be to wait for fourth-quarter results before issuing full-year guidance, and we think Salesforce may follow suit."
The fiscal 2027 third-quarter results for Snowflake and Salesforce will not be released until December 2.
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