Stop compiling Python UDFs like they're Python Models (#12154)

* Only do special python model compilation for python models (not other python nodes)

* Test jinja compilation of python udfs

* Add changie doc

Author: QMalcolm

.changes/unreleased/Fixes-20251106-163514.yaml

@@ -0,0 +1,6 @@
+kind: Fixes
+body: Stop compiling python udfs like python models
+time: 2025-11-06T16:35:14.735442-06:00
+custom:
+  Author: QMalcolm
+  Issue: "12153"

core/dbt/compilation.py

@@ -599,7 +599,7 @@ def _compile_code(
         if extra_context is None:
             extra_context = {}
 
-        if node.language == ModelLanguage.python:
+        if node.language == ModelLanguage.python and node.resource_type == NodeType.Model:
             context = self._create_node_context(node, manifest, extra_context)
 
             postfix = jinja.get_rendered(

tests/functional/functions/test_udfs.py

@@ -17,6 +17,16 @@ def entry(value):
     return value * 2
 """
 
+double_it_py_with_jinja = """
+def entry(value):
+    {% if 1 == 1 %}
+    return value * 2
+    {% else %}
+    {# this should never happen #}
+    return value * 3
+    {% endif %}
+"""
+
 double_it_deterministic_sql = """
 {{ config(volatility='deterministic') }}
 SELECT value * 2
@@ -133,6 +143,13 @@ def functions(self) -> Dict[str, str]:
         }
 
 
+scalar_function_python_macro = """
+{% macro postgres__scalar_function_python(target_relation) %}
+  SELECT 1;
+{% endmacro %}
+"""
+
+
 class TestBasicSQLUDF(BasicUDFSetup):
     def test_basic_parsing(self, project):
         # Simple parsing
@@ -387,3 +404,48 @@ def test_can_config_functions_from_project_config(self, project):
         function_node = manifest.functions["function.test.double_it"]
         # Volatility from sql should take precedence over the project config
         assert function_node.config.volatility == FunctionVolatility.Deterministic
+
+
+class TestPythonFunctionWithoutJinjaHasEquivalentRawCodeAndCompiledCode:
+    @pytest.fixture(scope="class")
+    def functions(self) -> Dict[str, str]:
+        return {
+            "double_it.py": double_it_py,
+            "double_it.yml": double_it_python_yml,
+        }
+
+    @pytest.fixture(scope="class")
+    def macros(self) -> Dict[str, str]:
+        return {
+            "postgres__scalar_function_python.sql": scalar_function_python_macro,
+        }
+
+    def test_udfs(self, project):
+        run_dbt(["build"])
+        result = run_dbt(["compile"])
+        assert len(result.results) == 1
+        node = result.results[0].node
+        assert isinstance(node, FunctionNode)
+        assert node.raw_code == node.compiled_code
+
+
+class TestPythonFunctionWithJinjaHasCorrectCompiledCode:
+    @pytest.fixture(scope="class")
+    def functions(self) -> Dict[str, str]:
+        return {
+            "double_it.py": double_it_py_with_jinja,
+            "double_it.yml": double_it_python_yml,
+        }
+
+    @pytest.fixture(scope="class")
+    def macros(self) -> Dict[str, str]:
+        return {
+            "postgres__scalar_function_python.sql": scalar_function_python_macro,
+        }
+
+    def test_udfs(self, project):
+        result = run_dbt(["compile"])
+        assert len(result.results) == 1
+        node = result.results[0].node
+        assert isinstance(node, FunctionNode)
+        assert node.compiled_code == "def entry(value):\n    \n    return value * 2\n    "