Snowflake's AI Data Cloud Expands: Is Growth Thesis Strengthening?

Snowflake SNOW is benefiting from its strong focus on the AI Data Cloud, which is rapidly becoming a key catalyst of its growth thesis. This is also driving strong customer adoption and revenue growth.

In the second quarter of fiscal 2026, Snowflake reported product revenues of $1.09 billion, a 32% year-over-year increase, showcasing the accelerating demand for its AI Data Cloud. Approximately 50% of new customer wins in the second quarter of fiscal 2026 were influenced by AI, and 25% of all deployed use cases involved AI. The company also announced that more than 6,100 accounts are using Snowflake’s AI weekly, highlighting strong adoption.

To further strengthen its growing demand, Snowflake recently partnered with Siemens to integrate its AI Data Cloud with Siemens Industrial Edge. This enables manufacturers to seamlessly connect OT and IT data for AI-driven insights that boost machine performance, production efficiency, and data transparency.

Snowflake’s collaboration with OpenAI, Anthropic, and Microsoft Azure is expanding its reach and enhancing its AI capabilities. Azure was the fastest-growing cloud for Snowflake, with 40% year-over-year growth in the second quarter of fiscal 2026.

Snowflake’s expanding portfolio has been a major growth driver. The company launched approximately 250 new capabilities in the first half of fiscal 2026, including Snowflake Intelligence, Cortex AI SQL, Gen2 warehouses, Snowflake Postgres, and Snowflake OpenFlow. These innovations simplify data management, enhance performance, and enable AI-driven insights.

Snowflake Suffers From Stiff Competition

Snowflake is facing stiff competition from the likes of Amazon AMZN and Alphabet GOOGL in the AI Data Cloud space. These companies, through their respective cloud platforms, Amazon Web Services (AWS) and Google Cloud, offer compelling solutions that directly compete with Snowflake’s offerings.

Amazon’s cloud computing platform, AWS, offers solutions like Amazon Redshift and SageMaker, enabling advanced data analytics and machine learning capabilities.

Alphabet’s cloud service, Google Cloud, competes with offerings like BigQuery and Vertex AI, targeting Snowflake’s core market. Both Amazon and Alphabet leverage their extensive cloud ecosystems to attract enterprises, making it harder for Snowflake to dominate in the market.

SNOW’s Share Price Performance, Valuation, and Estimates

Snowflake shares have appreciated 51.3% year to date, outperforming the broader Zacks Computer & Technology sector’s return of 12.9% and the Zacks Internet Software industry’s increase of 19.5%.

SNOW Stock's Performance

Snowflake stock is trading at a premium, with a forward 12-month Price/Sales of 15.02X compared with the industry’s 5.68X. SNOW has a Value score of F.

Price/Sales (F12M)

The consensus mark for SNOW’s fiscal 2026 earnings is pegged at $1.08 per share, which has increased 1.8% over the past 30 days. The figure indicates a 30.12% increase year over year. 

Snowflake Inc. Price and Consensus

Snowflake Inc. price-consensus-chart | Snowflake Inc. Quote

Snowflake currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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