Snowflake recently delivered one of its strongest quarters in years, prompting Wall Street to take notice.
In an investor note shared with me, Morgan Stanley analyst Sanjit Singh raised his price target on the cloud data company to $470 from $300, keeping his “Overweight” rating intact.
Valued at a market cap of $106 billion, SNOW stock is priced at $356 at the time of writing. Over the last three years, SNOW stock has more than doubled.
A higher stock price target comes after Snowflake posted its third straight quarter of accelerating revenue growth, a trend that’s rare for a company of its size.
Singh called it “an AI-powered growth flywheel that is still in the early innings.”
Snowflake stock climbs on earnings beat
Snowflake (SNOW) reported second-quarter fiscal 2027 results on Sept. 2, and the numbers topped expectations across the board.
Product revenue came in at $1.49 billion, up 37% year over year, accelerating from 34% growth in the prior quarter and beating both the company’s own guidance and Wall Street consensus.
According to Morgan Stanley’s note, the results were “particularly strong against a ~530bps tougher YoY comparison,” meaning Snowflake grew faster even though it was being compared against a much stronger quarter from a year ago.
Related: Bank of America raises price targets on 10 software stocks
Here’s a quick snapshot of the key numbers from the quarter:
- Product revenue: $1.49 billion, up 37% year over year
- Net revenue retention rate: 126%
- Net new customers added: 692, up 32% year over year
- Total customers: 14,554, up 22% year over year
- Customers spending over $1 million annually: 828, up 27% year over year
Snowflake CEO Sridhar Ramaswamy pointed to the breadth of that growth on the company’s earnings call, stating:
“We see the acceleration come from a very broad swath of customers. It is not concentrated, for example, with, let’s say, AI native companies. They continue to be a small part of our overall revenue stream.”
Morgan Stanley raises Snowflake stock price target
Morgan Stanley’s bullish call centers on what it describes as a flywheel effect.
Snowflake’s AI products, mainly its CoCo (formerly Cortex Code) and CoWork tools, are bringing in new customers while also pushing existing customers to use more of Snowflake’s core data platform.
Company management estimated that AI products drove about half of the quarter’s growth acceleration, with the rest coming from strength in the core business, including faster data migrations from legacy systems.
CoCo adoption jumped to more than 9,100 accounts, up over 2,000 from the prior quarter. CoWork reached 5,800 accounts, up nearly 11% quarter over quarter.
Morgan Stanley also flagged Snowflake’s operating discipline.
More Bank Stock Resets:
- Bank of America revamps AMD stock price target for 2026
- Morgan Stanley resets Microsoft stock forecast ahead of earnings
- Goldman Sachs revamps SpaceX stock price target for 2026
Non-GAAP operating margin expanded more than 400 basis points year over year to 15%, even as the company kept hiring modestly.
Year to date, Snowflake added 334 employees, well below the 935 it added over the same period last year.
Chief Financial Officer Brian Robins explained the approach on the earnings call.
“AI is driving greater efficiency and reducing our reliance on headcount growth,” he said, adding that the company is using its own AI tools internally across sales, finance, and marketing.
Snowflake stock price target reflects stronger guidance
Snowflake also raised its full-year outlook.
The company now expects fiscal 2027 product revenue of $6.07 billion, representing 36% growth, up from a prior forecast of 31%.
Third-quarter guidance calls for product revenue growth of 37% to 38%, marking another acceleration.
Morgan Stanley’s analysis suggests Snowflake has a clear path toward 40% growth in the second half of its fiscal year, a figure the firm called the “major takeaway” from the quarter.
The firm’s new $470 price target is built on a discounted cash flow model, assuming Snowflake’s revenue grows at roughly a 26% compound annual rate through 2030, with free cash flow reaching about $4.4 billion by then.
Not every metric was perfect.
Adjusted free cash flow came in at $92 million, below both Morgan Stanley’s and Wall Street’s expectations. Product gross margin also slipped to 74.7% as AI workloads, which carry thinner margins today, made up a bigger share of revenue.
What’s next for Snowflake stock
Analysts project Snowflake to increase free cash flow from $1.12 billion in fiscal 2026 to $4.47 billion in fiscal 2031.
If the tech stock trades at 35x forward FCF, below the three-year average of 55x, it could return 50% over the next four years.
Out of 35 analysts covering Snowflake stock, 32 recommend “Buy,” and three recommend “Hold.” The average SNOW stock price target is $435, 22% above current levels.
Executives struck a confident tone about what’s ahead. “The Agentic Enterprise runs on Snowflake, and we’re just getting started,” Ramaswamy said in his closing remarks on the earnings call.
For now, Wall Street appears convinced that Snowflake’s AI bet is starting to pay off in the numbers, not just the narrative.
Related: Wells Fargo sees a massive number in Snowflake’s future
