The world is abuzz with the potential of AI, and Snowflake is undeniably riding that wave. But beneath the excitement surrounding Cortex AI, Arctic, and the company's aggressive AI roadmap, lies a quiet powerhouse poised to drive growth in 2025: the unassuming adoption of Iceberg tables by Snowflake's largest customers. While Wall Street is focused on the obvious – optimization, consumption patterns, and the potential of emerging AI products – they're overlooking a seismic shift in data strategy that could unlock a new era of growth for Snowflake.

Let's rewind to Snowflake's Q4 2024 earnings call . Amidst the celebratory news of CEO transitions and record bookings, CFO Mike Scarpelli dropped a bombshell: **Snowflake expects numerous large customers to adopt Iceberg table formats, moving their data out of Snowflake.** This seemingly innocuous statement, barely a blip on the radar of most analysts, holds the key to understanding the company's surprisingly conservative 2025 guidance.

On the surface, Snowflake's forecast appears perplexing. A spectacular 41% RPO acceleration in Q4 suggests robust demand, yet revenue guidance remains stubbornly in the low 20% range. Investors are scratching their heads, wondering how a company experiencing such strong customer commitment could project such modest growth. The answer lies within the implications of Iceberg adoption.

Iceberg, an open table format for massive datasets, offers Snowflake's largest customers – the very customers driving those record bookings – a tantalizing alternative. They can now opt to store their data in cheaper cloud storage solutions, leveraging Iceberg's interoperability to query that data directly from Snowflake. This means Snowflake could lose out on a chunk of storage revenue, and potentially some compute revenue associated with data ingestion, without the guarantee of immediate offsetting growth from new workloads.

This is a deliberate gamble. Snowflake is betting that enabling customers to retain control over their data, even outside its platform, will foster greater trust and, ultimately, lead to the adoption of more lucrative AI and analytics workloads. It's a calculated risk designed to expand the addressable market, pulling in a vast sea of data currently languishing in data lakes and accelerating the shift towards Snowflake as the central data platform for the enterprise.

This strategy is evident in Snowflake's muted pronouncements about unstructured data growth. While still significant, the focus has shifted. Instead of merely ingesting more unstructured data into its platform, Snowflake is now enabling customers to access and analyze it *where it already lives*. It's a subtle change in messaging, reflecting a profound shift in approach.

Quantifying the Iceberg Impact

To quantify the potential impact, consider the storage revenue headwind. Storage comprises roughly 10-11% of Snowflake's overall revenue . Assuming a conservative estimate of 20% of large customers shifting 50% of their new data growth to Iceberg storage, the impact could be significant – potentially shaving off several percentage points from Snowflake's projected growth. And that's without factoring in the potential loss of compute revenue associated with data ingestion.

"**Key Assumption:**"

But here's the catch: Snowflake is *not* factoring the anticipated offsetting revenue from new workloads into its guidance . It's a deliberate act of conservatism, a testament to the company's commitment to transparency and a recognition of the inherent uncertainty surrounding the adoption of emerging technologies.

The Growth Upside

This is where the opportunity lies. If Snowflake's bet pays off, and customers embrace Iceberg, the floodgates will open. Vast troves of previously inaccessible data will become available for analysis, fueling a surge in compute demand and unlocking new use cases for Snowpark, Cortex, and other emerging products. This could propel growth far beyond current projections, creating a virtuous cycle where greater data interoperability drives higher consumption and expands Snowflake's reach within the enterprise.

Revenue Growth & Iceberg Adoption

The following chart illustrates the potential impact of Iceberg adoption on Snowflake's revenue growth. The blue bars represent Snowflake's current guidance, while the green bars represent the potential upside from increased compute demand driven by Iceberg adoption.

A Contrarian Approach

Snowflake's strategy is bold and forward-thinking. While other cloud providers are scrambling to build walls around their platforms, Snowflake is tearing them down, betting on the power of its technology and the trust it has built with its customers. This contrarian approach, largely overlooked by Wall Street, could prove to be the company's secret weapon, unleashing a wave of unforecast growth in 2025 and beyond.

"**Fun Fact:** The name "Snowflake" was chosen to reflect the company's unique architecture, which is designed to handle diverse data sources and workloads, just like a snowflake's intricate and varied structure."