To The Moon

Snowflake and Broadcom have just released their latest earnings.

Both companies delivered solid results, but the market reacted very differently. Snowflake jumped more than 22% in after-hours trading, while Broadcom fell by around 4% at one point.

Both companies are benefiting from the AI boom, so why did their share prices move in opposite directions? I think there are three main reasons.

1. Both delivered strong results, but the market trades on expectations

Let’s start with Snowflake.

Snowflake reported second-quarter product revenue of $1.492 billion, up 37% year over year. Total revenue reached $1.547 billion, representing 35% growth. Adjusted earnings per share came in at $0.62, well above the market expectation of $0.45.

Those numbers were already strong, but what really excited the market was Snowflake’s decision to raise its outlook.

The company now expects FY2027 product revenue of $6.07 billion, representing 36% growth and exceeding its previous forecast of $5.84 billion. It also raised its expected operating margin from 13.5% to 14.5%.

In simple terms, Snowflake told investors: We performed better than expected this quarter, and our future growth may also be stronger than previously thought.

That gave the market a reason to assign the stock a higher valuation, which explains the sharp after-hours rally.

Now let’s look at Broadcom.

Broadcom reported third-quarter revenue of $29.591 billion, up 86% year over year. Adjusted earnings per share reached $3.32, while free cash flow came in at $13.665 billion.

Most importantly, AI semiconductor revenue reached $16.7 billion, soaring 221% year over year. This shows that Broadcom has become a major player in the AI chip supply chain.

The problem is that market expectations for Broadcom were already extremely high.

The company guided for fourth-quarter revenue of approximately $34.8 billion, slightly below the market estimate of around $35.05 billion. The gap was small, but for a stock that has already risen substantially and carries high expectations, “good” is no longer enough—it has to be exceptional.

That is why Broadcom’s shares fell after hours despite the company delivering a strong quarter.

2. Broadcom sells AI infrastructure, while Snowflake wants to become the gateway to enterprise data

Although both companies talk about AI, they make money in very different ways.

Broadcom operates at the infrastructure level.

Large technology companies building AI data centers need custom AI accelerators, networking chips and supporting software. Broadcom is one of the key suppliers behind this infrastructure.

Its semiconductor solutions business generated $20.839 billion in revenue this quarter, up 127% year over year. Infrastructure software revenue reached $8.752 billion, growing 29%.

You can think of Broadcom as one of the “picks and shovels” companies of the AI era. As long as major technology companies continue spending heavily on AI infrastructure, Broadcom should continue to benefit.

Snowflake is running a different kind of business.

For a company to use AI effectively, buying chips is not enough. Its data may be scattered across different systems, with complicated issues involving privacy, security, access and governance.

If the data is not properly organized, it becomes difficult to put AI into real-world use.

Snowflake aims to bring that data together and make it easier for businesses to build AI applications and intelligent agents.

The numbers suggest that this strategy is already generating real business.

Snowflake’s net revenue retention rate reached 126%. Put simply, its existing customers are spending an average of 26% more than they did a year ago.

The company now has 828 customers generating more than $1 million in annual product revenue. Its remaining performance obligations, or RPO, reached $9 billion, up 30% year over year. Around 54% of that amount is expected to become revenue within the next 12 months.

This suggests that customers are not merely testing Snowflake’s AI products—they are actually paying to use them.

However, RPO declined slightly from $9.205 billion in the previous quarter. Investors should therefore continue watching whether new contract growth can maintain its momentum.

3. The AI story remains strong, but investors now want real results

These two earnings reports suggest that the AI boom is not over. However, the market is becoming much more demanding.

Previously, a company could announce an AI strategy and see its share price rise. Investors now want clearer answers: How much revenue is AI actually generating? Can that growth continue? And when will it translate into real profits?

For Snowflake, I would focus on several indicators going forward.

First, can product revenue continue growing by more than 30%? Second, will existing customers keep increasing their spending? Third, can the company continue adding large customers? Finally, when will Snowflake become profitable on a GAAP basis?

Snowflake still recorded a GAAP net loss of $191.7 million this quarter, while stock-based compensation reached approximately $423.6 million.

Its biggest attraction is its accelerating growth, but its risks are equally clear: the valuation is not cheap, and its actual profitability still needs to improve. After an after-hours gain of more than 20%, investors should be especially careful about chasing the stock.

Broadcom’s key advantage is its powerful ability to generate profits and free cash flow. However, expectations are already high, and its AI business remains relatively dependent on a small number of major customers.

If major technology companies slow their AI spending, or if customers allocate more orders to competing chipmakers, Broadcom’s growth could be affected.

Overall, Broadcom is selling the “picks and shovels” of the AI era, while Snowflake is competing to become the enterprise data gateway for AI.

Both companies could continue benefiting from AI, but a great company does not automatically mean a great stock at any price.

Snowflake’s sharp rally does not mean investors should chase it immediately. Broadcom’s short-term decline also does not mean its long-term investment case has broken down.

What really matters is whether growth can continue over the next few quarters—and whether today’s valuation has already priced in too much of that future growth.

$Snowflake(SNOW)$ $Broadcom(AVGO)$ $NVIDIA(NVDA)$

The views above are for informational purposes only and do not constitute investment advice.