Snowflake Inc (NYSE:SNOW) remains well-positioned despite intensifying competition from Databricks, with Jefferies analysts writing that both companies are benefiting from growing enterprise demand for data and artificial intelligence infrastructure and have room to expand.
Jefferies noted that Databricks' annualized revenue run rate is on track to exceed $6.9 billion in the first half of fiscal 2027, representing about 65% year-over-year growth in its core business and roughly 80% growth including large language model monetization.
By comparison, the firm estimates Snowflake's revenue run rate at approximately $5.5 billion, growing 32% year over year.
The analysts wrote that Databricks is poised to surpass Snowflake in scale for the first time, though Snowflake maintains stronger profitability, generating free cash flow margins of around 23% while Databricks remains near breakeven.
Jefferies highlighted that Snowflake has accelerated growth over the past two quarters despite rising competition, delivering roughly four percentage points of product revenue acceleration in the first quarter of fiscal 2027 to 34% year-over-year growth.
The firm wrote that Snowflake's AI offerings, including CoCo and Snowflake CoWork, could drive additional monetization opportunities and increase consumption of its core data platform.
Databricks has also expanded its data warehousing business, with its SQL Warehouse product surpassing a $1.5 billion annualized revenue run rate. However, Jefferies wrote that Snowflake still has a materially larger data warehousing business and has significantly narrowed the technical gap over the past year, particularly in AI capabilities.
The analysts added that Databricks' Genie platform could help broaden AI adoption among business users by enabling employees to access and interact with enterprise data through integrations with applications such as Microsoft Teams, Slack and Google Drive.
Shares of Snowflake closed at about $235 on Wednesday, having gained about 7% so far this year.