Snowflake is giving investors plenty to be excited about. The data analytics company reported better-than-expected earnings, and Wall Street sent the stock up more than $71 a share. The strong results also caught the attention of major Wall Street banks. Morgan Stanley and Bank of America both raised their price targets for Snowflake to $470, suggesting the stock could climb nearly 54% from Wednesday’s closing price.

Morgan Stanley’s previous target was $300, while Bank of America had a target of $395. Both banks remain bullish on the company, with Morgan Stanley keeping its Overweight rating and Bank of America maintaining a Buy rating.

Analysts at Rosenblatt also raised their price target following the earnings report, moving it from $345 to $370 while keeping a Buy rating.

So, what has investors so excited? A big part of the answer is artificial intelligence.

Snowflake’s AI business is growing quickly, and the company is showing signs that customers are using more of its platform as they look for ways to put AI to work.

Snowflake Keeps Beating Expectations

Snowflake’s latest numbers were hard for investors to ignore. The company reported adjusted earnings of 62 cents per share for its fiscal second quarter. Analysts were expecting just 45 cents. Revenue came in at $1.55 billion, up about 35% from a year earlier. That was also ahead of expectations, with analysts looking for revenue of roughly $1.48 billion to $1.5 billion.

But one of the most important numbers was product revenue. Snowflake brought in $1.49 billion from its products during the quarter, an increase of 37% from the same period last year.

That matters because product revenue gives investors a good idea of how much customers are actually using Snowflake’s platform.

And customers are clearly using it more.

Snowflake’s net revenue retention rate came in at 126%. Basically, that means existing customers are spending more money with Snowflake over time. The company also pointed out that this was its third consecutive quarter of accelerating product revenue growth.

That trend is one reason Wall Street is becoming more confident in the stock.

AI Is Giving Snowflake Another Boost

Artificial intelligence has become a major focus for Snowflake, and so far, the strategy appears to be working. The company is building AI tools that allow businesses to work with their data, develop AI applications and automate different tasks. As more companies experiment with AI, Snowflake hopes to become an important part of that process.

There are already signs that customers are adopting these tools.

Snowflake said its CoCo AI product surpassed 9,100 customer accounts during the quarter. More than 2,000 accounts were added in just three months. CoWork, another AI product, grew to about 5,800 customer accounts. The company is also moving quickly on new products. Snowflake launched more than 330 new capabilities during the first half of fiscal 2027, up 35% from the same period last year.

CEO Sridhar Ramaswamy believes AI could create a kind of snowball effect for the business.

As customers use more of Snowflake’s AI tools, they also end up using more of the company’s core data platform. More usage means more revenue, which can then lead to even more investment and adoption.

The Forecast Looks Good, Too

The good news didn’t stop with the latest quarter.

Snowflake also gave investors a strong forecast for its fiscal third quarter.

The company expects product revenue of between $1.588 billion and $1.593 billion. That is comfortably above Wall Street’s estimate of about $1.51 billion.

Snowflake expects an adjusted operating margin of around 15.5% for the third quarter. The company also raised its full-year outlook. It now expects product revenue to reach about $6.07 billion, representing 36% growth from the previous year. Full-year adjusted operating margin is expected to be 14.5%.

Of course, there are still questions.

After such a big jump in the stock, investors will want to see Snowflake continue delivering strong growth while improving profitability. For now, though, the story looks solid.

Snowflake is growing its core business. Its AI products are gaining traction and the company has raised its revenue outlook for the year. With Wall Street analysts raising their price targets and investors betting on the company’s AI opportunity, Snowflake has entered the second half of the year with a lot of momentum.

Sincerely,

Ian Cooper