Snowflake Soars 15% After Blowout Earnings — AI Momentum and Record Growth Spark Wall Street Upgrades

Snowflake (SNOW) delivered one of its strongest quarters in years, and the stock is reacting in kind. Shares jumped nearly 15% in Thursday’s premarket to $228.29, bringing the stock back toward its 2025 high of $229 and within striking distance of the key $237 resistance level, which would mark a 3.5-year high. The surge followed fiscal Q2 results that topped Wall Street expectations on revenue, earnings, and product growth, with management raising guidance for the remainder of the year. Investors interpreted the results as a clear signal that Snowflake’s platform is benefiting from an ongoing wave of enterprise data modernization and AI adoption, setting the stage for continued momentum into the back half of fiscal 2026.

On the headline numbers, Snowflake reported adjusted EPS of $0.35, ahead of consensus at $0.27. Revenue came in at $1.14 billion versus Street estimates of $1.09 billion. Product revenue, the company’s most closely watched metric, rose 32% year-over-year to $1.09 billion, compared with expectations for $1.04 billion and a consensus growth rate closer to 25.5%. Remaining performance obligations (RPOs) grew 33% to $6.9 billion, and net revenue retention (NRR) ticked higher to 125% from 124% in Q1, suggesting customers continue to increase their spend. Non-GAAP operating margin improved to 11%, with product gross margin at 76.4%. Management also highlighted strong free cash flow trends, reporting a 6% adjusted FCF margin and a cash balance of $4.6 billion.

Looking ahead, Snowflake guided for Q3 product revenue of $1.125 billion to $1.13 billion, representing 25% to 26% year-over-year growth and just ahead of consensus at $1.121 billion. Full-year FY26 product revenue is now expected at $4.395 billion, up from $4.325 billion previously, and representing 27% growth versus 25% guided last quarter. Management also nudged up its margin guidance, calling for non-GAAP operating margin of 9% for the year compared to 8% prior, alongside product gross margin of 75% and adjusted FCF margin of 25%. CFO Michael Scarpelli described the updated guide as supported by strong contracted billings, a healthy renewal base, and pipeline strength.

The key driver of the beat was accelerating consumption in Snowflake’s core data warehouse business, supported by customer migrations that triggered higher usage. New workloads also contributed: management noted that AI now influences nearly 50% of new customer wins and 25% of active use cases, with over 6,100 accounts engaging with Snowflake AI weekly. CEO Sridhar Ramaswamy emphasized the company’s innovation cadence, pointing to roughly 250 new features launched in the first half of the year, including Snowflake Intelligence, Cortex AI SQL, Snowflake Postgres, Gen2 warehouses, and Snowpark Connect for Apache Spark. These new capabilities are expanding Snowflake’s reach into data integration, analytics, and AI application development, reinforcing the company’s pitch as a full-scale data platform.

Analysts reacted swiftly and overwhelmingly positively. Truist called the results a “powerful acceleration” across analytics, engineering, AI, and collaboration, lifting its price target to $270 from $235. BTIG described the quarter as “exceptional,” noting the product revenue beat was well above both Street and buy-side expectations, and raised its PT to $276. Piper pushed its target to $285, highlighting stronger sales and marketing investment and AI traction. Evercore boosted its PT to $280, citing room for upward revisions to estimates. RBC, Oppenheimer, and Cantor each lifted their PTs to $275, emphasizing broad-based demand and product adoption. Goldman Sachs moved to $260, stressing Snowflake’s ability to scale to $10 billion in revenue and its expanding AI product roadmap. In all cases, the message was consistent: Snowflake is delivering at scale, and its AI-driven product set is creating durable growth tailwinds.

Beyond the numbers, analysts zeroed in on the company’s improving execution. Several noted that Ramaswamy’s leadership has instilled a “founder-mode” urgency across sales, operations, and R&D, which now appears to be paying dividends. The surge in large-customer engagement stood out as well: $1 million-plus customers rose nearly 30% year-over-year to 654, a record. Citi pointed out that new migrations included some one-time benefits but argued most of the upside is durable, reinforced by bookings growth and the addition of 50 new $1 million customers. Goldman and others stressed Snowflake’s positioning as a platform for generative AI applications, with products like Cortex AISQL and Snowflake Connect for Apache Spark broadening its TAM.

Still, competition remains a discussion point. Management fielded questions about rivals such as Databricks, which recently announced a funding round valuing it at $100 billion. Snowflake’s market cap sits around $65 billion, but analysts like D.A. Davidson argue that both companies can coexist, with Snowflake increasingly pushing into Databricks’ AI/ML territory. Management brushed off concerns, stressing that customer adoption trends and innovation cadence underpin its growth.

For investors, the big takeaway is that Snowflake not only beat expectations but reaccelerated growth at scale, something many software names have struggled to achieve. With product revenue growth back above 30% and AI adoption expanding rapidly, the company’s outlook is strengthening at a time when enterprises are allocating larger budgets toward data modernization and AI projects. While shares still face resistance near $237, the surge post-earnings suggests investors are reassessing Snowflake’s long-term potential, with analyst targets clustered between $260 and $285 providing a bullish roadmap if execution continues.