Snowflake's AI-Driven Growth: UBS's $310 Price Target and the Road Ahead

Snowflake (SNOW) has emerged as a pivotal player in the AI-driven data cloud revolution, and UBS's recent upgrade of its price target to $310-from $285-reflects a compelling strategic rationale rooted in the company's financial performance, product innovation, and market positioning. This analysis unpacks the factors underpinning UBS's optimism and evaluates Snowflake's long-term potential in the rapidly evolving AI landscape.

Strategic Rationale: AI as the Catalyst

UBS analyst Karl Keirstead has positioned Snowflake as a "leader in the AI data cloud," emphasizing its ability to deliver scalable solutions for enterprises navigating the AI boom, according to a GuruFocus report. The firm's price target of $310 implies a 28.5% upside from Snowflake's current valuation, a bold bet on the company's capacity to capitalize on AI-driven demand. This optimism is fueled by Snowflake's recent Q2 FY2026 earnings, which reported $1.14 billion in revenue-surpassing the $1.09 billion forecast-and a revised full-year guidance of $4.4 billion, according to an AimarketPulse analysis. Such results underscore Snowflake's resilience in a competitive market and its ability to monetize its cloud data platform amid surging enterprise demand. Historically, when Snowflake has beaten earnings expectations, the stock has shown an average excess return of +3.9% on the first trading day, with a cumulative gain of around +10.8% by day +30, though with high dispersion and a small sample size of five events, the AimarketPulse analysis noted.

At the heart of UBS's thesis is Snowflake's strategic pivot toward AI. The company's Cortex AI platform, enhanced by partnerships with NVIDIA and generative AI leaders like OpenAI and Anthropic, has positioned it to process unstructured data at scale, the AimarketPulse analysis observed. Notably, Snowflake's $6 billion AI Data Cloud expansion-announced at its March 2025 Data Summit-enables real-time analytics and a 60% increase in unstructured data processing capacity compared to rivals like Databricks, the same analysis reported. These advancements align with UBS's broader market forecast: the AI analytics market is projected to reach $80 billion in 2025, with Snowflake targeting a 22% share ($17.6 billion in potential revenue), according to that analysis.

Financial Projections and Market Dynamics

UBS's bullish stance is further supported by macroeconomic trends. The bank forecasts global AI spending to surge to $360 billion in 2025, with a 60% year-over-year increase, driven by adoption beyond traditional tech giants, according to a UBS forecast. By 2026, that forecast expects this spending to climb to $480 billion, reflecting a 33% growth rate. Snowflake's product revenue forecast of $4.325 billion for 2025-backed by a 24% year-over-year growth projection-positions it to capture a significant slice of this expanding pie, per a PoniakTimes forecast.

Moreover, UBS highlights Snowflake's financial discipline and margin resilience. Despite the capital-intensive nature of AI infrastructure, the company's operating margins have remained stable, supported by its multi-cloud architecture and pay-as-you-go pricing model, the AimarketPulse piece noted. This contrasts with rivals like Databricks, which face higher costs in managing unstructured data. UBS also notes that Snowflake's expanded collaboration with NVIDIA-enabling AI model training and inference at scale-reinforces its competitive edge, the AimarketPulse analysis added.

Risks and Competitive Challenges

While the outlook is largely positive, risks persist. The AI data cloud market is highly competitive, with players like Databricks, Amazon Redshift, and Google BigQuery vying for market share. Additionally, macroeconomic headwinds, such as potential interest rate hikes or a slowdown in enterprise AI spending, could dampen growth. However, UBS argues that Snowflake's first-mover advantage in AI-ready data platforms and its ecosystem of partners (e.g., NVIDIA, OpenAI) provide a durable moat, the GuruFocus report argued.

Conclusion: A Buy for the Long Term

UBS's $310 price target for Snowflake reflects confidence in the company's ability to navigate these challenges while capitalizing on the AI-driven data cloud boom. With a 28.5% upside from current levels, the firm's rating aligns with broader analyst sentiment, which pegs an average price target of $266.67, UBS's data show. For investors, Snowflake represents a high-conviction play on the AI revolution, provided they are willing to tolerate near-term volatility in exchange for long-term growth.