Snowflake Delivers One of Its Best Quarters. Wall Street Is Loving the AI Boom
Snowflake (SNOW) stock is having a big moment. Shares jumped about 17% on Monday after the cloud data company reported a much stronger fiscal second quarter and raised its outlook. That reaction matters. Investors have spent much of 2026 debating whether artificial intelligence would hurt traditional software companies or create a new growth cycle for…
Snowflake (SNOW) stock is having a big moment. Shares jumped about 17% on Monday after the cloud data company reported a much stronger fiscal second quarter and raised its outlook. That reaction matters. Investors have spent much of 2026 debating whether artificial intelligence would hurt traditional software companies or create a new growth cycle for them. Snowflake is giving the bulls a strong answer.
The company is not just selling data storage anymore. Its AI tools are pushing customers to use more of the platform. That is exactly what investors wanted to see. Product revenue accelerated for the third straight quarter, while management lifted its full-year forecast. The result is a stronger growth story and a better profitability story at the same time. Still, SNOW is not cheap. The market is already pricing in a lot of success.
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SNOW Stock Has Rallied Sharply in 2026
Snowflake shares are up about 62% year to date. Much of that gain came from better AI execution, stronger consumption, and major cloud partnerships.
The latest jump came after the company showed AI demand was translating into real revenue. The main risk is valuation. A stock that has already moved this far has little room for disappointment. SNOW trades at roughly 24 times trailing sales and about 24 times enterprise value to revenue. Those are rich numbers. The broader software industry median enterprise value to revenue is around 1.9 times.
That premium is not hard to understand. Snowflake is growing much faster than the average software company. But investors are paying heavily for that growth, so execution now matters even more.
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AI Is Turning Into a Real Catalyst for Snowflake
The latest quarter shows why the market is getting excited. Snowflake reported $1.55 billion in revenue, up 35% year over year. Product revenue reached $1.49 billion, up 37%. That was the key figure because it shows customers are spending more on the core platform.
AI appears to be driving much of that acceleration. Snowflake said AI products contributed about half of the recent growth acceleration. Its CoCo coding assistant and CoWork enterprise AI product also gained traction.
Snowflake also has a five-year, $6 billion partnership with Amazon Web Services. Earlier this year, it announced a $200 million multi-year partnership with OpenAI. These moves could help Snowflake capture more enterprise AI workloads and increase consumption across its platform. CEO Sridhar Ramaswamy put it simply: “AI continues to compound our advantages, creating a flywheel effect across the business.”
That flywheel is important. More AI usage can mean more data, ore data can mean more Snowflake consumption, and higher consumption can drive more revenue.
Snowflake Lifts Fiscal 2027 Revenue Outlook
Despite the strong sales growth, Snowflake still posted a GAAP net loss of $191.7 million. The adjusted numbers looked much better, with adjusted EPS rising to $0.62 from $0.35 a year earlier. Free cash flow came in at $83.8 million, while cash, cash equivalents, and short-term investments totaled about $4.3 billion.
Management also raised its outlook. It expects third-quarter product revenue of $1.588 billion to $1.593 billion. For fiscal 2027, product revenue guidance climbed to $6.07 billion from $5.84 billion. Snowflake also boosted its adjusted operating margin target to 14.5% from 13.5%. Wall Street is now looking for about $6.1 billion in full-year revenue, with analysts also raising their adjusted earnings estimates after the strong quarter.
Wall Street Is Raising SNOW Targets After the Beat
Analysts are clearly taking notice. Morgan Stanley raised its Snowflake target to $470 from $300. The firm argues that stronger core growth and rising AI contribution justify the higher valuation. Also, Stifel lifted its target to $450 from $350. It pointed to 37% product revenue growth and said Snowflake is benefiting from the combination of stronger core workloads and AI usage. Similarly, Raymond James raised its target to $425 from $275. The firm highlighted the third straight quarter of accelerating product revenue growth and stronger fiscal 2027 expectations.
Overall, Snowflake has a solid “Strong Buy” consensus rating from 45 analysts. Its mean price target is at $331, implying about 7% downside from the current price.
All told, that last number is worth watching. Analysts are bullish on Snowflake’s business. The bigger question now is whether earnings can keep growing fast enough to justify the stock’s very expensive valuation.
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On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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