3 Key Reasons to Buy Snowflake Stock Beyond the 71% Surge YTD

Snowflake SNOW has delivered a remarkable 71.4% surge year to date, outperforming the Zacks Internet Software industry’s 10.3% increase and the broader Zacks Computer and Technology sector’s 26.4% jump. The rally reflects growing investor confidence in Snowflake’s strong execution, accelerating product momentum and expanding AI data cloud opportunity.

By contrast, industry peers like Microsoft MSFT, Amazon AMZN and ServiceNow NOW have climbed 20.3%, 14% and declined 17% respectively during the same period. he stock’s superior gains stem from consistent revenue acceleration and renewed optimism around Snowflake’s differentiated consumption model, which continues to drive stronger operating leverage than peers.

SNOW Stock's Performance

AI-Driven Innovation Deepens Competitive Moat

Snowflake’s long-term growth story is increasingly defined by the strength of its competitive moat, one built on technology depth, ecosystem scale and first-mover advantage in AI-ready data infrastructure. As enterprises accelerate their shift toward unified, intelligent data platforms, Snowflake’s AI Data Cloud is emerging as the backbone of that transformation. Its architecture seamlessly combines governance, analytics and machine learning in a single environment, giving customers the flexibility to manage and operationalise data across multiple clouds without friction.

The Zacks Consensus Estimate for Snowflake’s third-quarter fiscal 2026 revenues is pegged at $1.18 billion, indicating a 25.4% year-over-year increase, as enterprises continue to consolidate workloads onto Snowflake’s platform. SNOW’s consumption-based model and network effects, where data sharing and collaboration expand organically among users, reinforce a virtuous cycle of growth that few peers can replicate.

AI-driven features such as Snowflake Intelligence and Cortex AI SQL are already gaining traction, enabling customers to derive real-time insights and deploy intelligent agents directly on enterprise data. These capabilities deepen customer stickiness and widen Snowflake’s moat relative to competitors like Microsoft, Amazon and ServiceNow, which remain tied to broader application ecosystems rather than neutral, data-centric architectures.

Snowflake appears well-positioned to capture the next wave of enterprise AI adoption, where the ability to unify, govern and activate data defines competitive advantage. With its platform deeply integrated across thousands of organisations, Snowflake is fast becoming a core layer of enterprise AI infrastructure, powering smarter decisions and continuous innovation at scale.

Expanding Enterprise Ecosystem Enhances Growth Durability

Snowflake’s expanding enterprise ecosystem continues to underpin its long-term growth trajectory. Strategic collaborations with Microsoft Azure and Amazon Web Services, alongside partnerships with global system integrators, are broadening Snowflake’s global footprint and accelerating enterprise adoption. Its cloud-neutral architecture gives organisations the flexibility to operate seamlessly across multiple environments while maintaining consistent data governance, a decisive advantage as enterprises scale analytics and AI workloads.

The Zacks Consensus Estimate for total customers in the third quarter of fiscal 2026 is pegged at 12,482, up 21.8% year over year, while the consensus mark for remaining performance obligations (RPO) is pegged at $7.46 billion, indicating a 30.8% year-over-year increase. These projections highlight Snowflake’s deepening relevance within the enterprise data stack and its ability to secure multi-year consumption commitments from large clients. By combining competitive independence with cooperative scale through its hyperscaler alliances, Snowflake is strengthening its position as the preferred data foundation across the cloud ecosystem, a balance few peers, including Microsoft, Amazon and ServiceNow, have managed to achieve.

Valuation Supports Growth Visibility

Snowflake’s premium valuation remains supported by its strong fundamentals and consistent execution, offering a compelling setup for investors despite the recent share price rally. The stock trades at a forward price-to-sales multiple of 16.65X, well above the industry average of 5.09X and the sector average of 6.92X. In comparison, Amazon trades at 3.43X, Microsoft at 11.08X and ServiceNow at 12X. This premium highlights Snowflake’s unique positioning as a high-growth, AI-driven data platform capable of sustaining above-industry expansion while improving profitability.

SNOW’s Valuation

The Zacks Consensus Estimate for third-quarter fiscal 2026 earnings is pegged at 31 cents per share, unchanged over the past 30 days and indicating a 55% year-over-year increase. For the same period, management expects product revenues between $1.125 billion and $1.13 billion, implying 25-26% growth, with an operating margin forecast of 9%. The combination of healthy growth, operating discipline, and expanding margins reinforces the case for Snowflake’s valuation premium. For investors, Snowflake’s accelerating enterprise adoption, deeper AI integration and steady margin expansion suggest that its premium valuation is underpinned by fundamentals rather than sentiment, reinforcing confidence in the company’s sustained growth potential within the cloud data ecosystem.

Snowflake Inc. Price and Consensus

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

Conclusion

Snowflake’s robust execution, rising enterprise adoption and accelerating integration of AI across its data platform make it one of the most compelling growth stories in the software space. SNOW continues to demonstrate a rare balance of scale, innovation and profitability, supported by improving operating margins and consistent top-line momentum. Its premium valuation remains justified by durable demand visibility, strong customer expansion and clear leadership in the AI data infrastructure market.

Snowflake currently carries a Zacks Rank #2 (Buy), indicating that investors may consider accumulating the stock at current levels. SNOW’s expanding ecosystem, disciplined cost management and growing relevance in enterprise AI position it well to sustain long-term growth. 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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