Snowflake Inc. (SNOW): A Bull Case Theory

 We came across a bullish thesis on Snowflake Inc. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on SNOW. Snowflake Inc.'s share was trading at $242.52 as of October 6th. SNOW’s forward P/E was 151.52 according to Yahoo Finance.

Snowflake Inc. (SNOW) delivered a strong Q2 performance, signaling accelerating momentum under CEO Sridhar Ramaswamy. The company’s AI-driven platform, featuring Cortex AI SQL, Gen 2 Warehouse, and Postgres integration via Crunchy, expands its data cloud from analytics into full-stack AI workloads.

Revenue growth reaccelerated to +31.8% YoY, with RPO and cRPO growth of +32.5% and billings up +41.4%, reflecting robust demand. Snowflake added 484 total customers, including 48 large accounts with $1M+ ARR, and expanded its ecosystem with 302 new Marketplace listings, highlighting strong network effects and increasing platform stickiness.

The company’s economic moat is reinforced by high switching costs, network effects, and economies of scale, with net revenue retention at 125% and data sharing now representing 40% of usage. Snowflake continues to dominate cloud data management, with Gartner and Forrester recognizing its leadership in cloud-native data platforms, AI integration, and secure data collaboration. Strategic acquisitions, such as Datavolo and Crunchy Data, strengthen its AI data infrastructure and integration capabilities.

Snowflake maintains financial discipline, reducing S&M and G&A expenses while sustaining heavy R&D investment to fuel innovation, resulting in an operating margin of 11.1% and 43% free cash flow margins. Despite elevated stock-based compensation, dilution is being managed. With a forward EV/Sales of 14.6x, below sector medians, and substantial growth potential in a $170B TAM expanding at 16% CAGR, Snowflake offers a compelling risk/reward profile. The combination of accelerating product adoption, strong unit economics, expanding customer base, and market leadership positions SNOW as a high-conviction growth investment.

Previously we covered a bullish thesis on Snowflake Inc. (SNOW) by Oliver | MMMT Wealth in April 2025, highlighting strong revenue growth, high net revenue retention, operational scalability, and robust financial flexibility. The stock has appreciated ~73% since coverage as growth accelerated. The thesis still stands with ongoing innovation. Sergey shares a similar view but emphasizes Q2 momentum, AI platform expansion, and strategic acquisitions.

Snowflake Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 100 hedge fund portfolios held SNOW at the end of the second quarter which was 94 in the previous quarter. While we acknowledge the potential of SNOW as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.