NEW YORK — For eighteen months, analysts treated Snowflake Inc. as a cloud data platform whose growth rate had somewhere to go but wasn’t going there fast enough. Tuesday’s earnings report closed that argument.
NYSE:SNOW surged 22% on Wednesday after Snowflake reported fiscal second-quarter product revenue of $1.49 billion — up 37% year-over-year and the third consecutive quarter of accelerating growth. For a company at Snowflake’s scale, producing three straight quarters of acceleration while enterprise technology budgets were compressed by the highest borrowing costs in nearly two decades was not supposed to happen.
Total revenue for the quarter came in at $1.55 billion, beating the $1.48 billion Wall Street had projected. Adjusted earnings per share hit $0.62, ahead of the $0.45 consensus by 38%. Snowflake raised its full-year product revenue guidance to $6.07 billion from the $5.84 billion it had set in May, implying 36% growth for the fiscal year ending January 2027.
The driving force, Chief Executive Sridhar Ramaswamy said on the earnings call Tuesday evening, was AI — specifically CoCo, Snowflake’s Cortex Code AI coding agent. The product added more than 2,000 customer accounts in the quarter and reached more than 60% of Snowflake’s existing install base within two quarters of general availability. Enterprise AI coding tools were supposed to land slowly, displaced by the inertia of established development workflows. Snowflake’s numbers suggested something faster was happening.
“AI is compounding Snowflake’s advantage across three reinforcing dynamics,” Ramaswamy told analysts. The claim contains a precise kind of ambiguity: Snowflake benefits when customers run more AI workloads on its platform, but it also benefits when those customers use AI tools to write more data pipelines and queries, generating the consumption that Snowflake’s variable billing model monetizes. Distinguishing between those two effects — genuine AI product revenue versus AI-assisted expansion of traditional usage — is something the company has not yet provided in segment form.
The $9 billion contracted backlog, representing committed future revenue not yet recognized, provides one measure of how much of the guidance is already booked rather than projected. Remaining performance obligations have grown at a rate roughly 10 percentage points above the product revenue growth rate, a pattern suggesting Snowflake is booking future commitments faster than it is working through existing ones.
Analyst upgrades arrived promptly. TD Cowen raised its price target on NYSE:SNOW to $370 and reiterated a Buy rating, calling the CoCo adoption curve one of the fastest enterprise AI rollouts it had tracked in the current cycle. Needham set a $450 target — the highest on Wall Street following the print — centered on the argument that Snowflake’s platform is being pulled into AI workloads by customer demand rather than pushed by vendor marketing, a distinction that matters for how durable the acceleration turns out to be. Rosenblatt Securities moved its target to $370. Seeking Alpha described the result as Snowflake demonstrating a “killer AI ability” with a quarter analysts had not expected at this growth rate.
What these upgrades do not resolve is the margin question. Snowflake’s non-GAAP product gross margin for the quarter was 78%, roughly in line with recent quarters, but AI inference and training tasks run on Snowflake’s Cortex platform consume compute at higher rates than traditional data warehousing and analytics work. As AI grows from a fraction to a majority of Snowflake’s consumption mix, the margin structure will face pressure the current numbers do not yet fully reveal. The company did not provide segment-level gross margin disclosure separating AI workloads from traditional ones — a disclosure gap that analysts will continue to push for as the composition shift accelerates. Per Seeking Alpha‘s coverage of the guidance signal, Snowflake also targets 14.5% non-GAAP operating margin for the full year, a figure the market is watching as a floor test for the company’s ability to grow profitably alongside its AI transition.
The 22% move on Wednesday pushed NYSE:SNOW to roughly $240, extending Snowflake’s 2026 calendar-year gain to approximately 65%. The stock traded below $110 in late 2024, when consumption growth decelerated and Ramaswamy’s appointment as CEO in replacement of Frank Slootman left institutional investors uncertain about the company’s strategic direction. That uncertainty did not survive Tuesday’s earnings call.
Snowflake’s result lands in a market where investors have spent September drawing sharper lines between AI companies whose revenues reflect genuine product adoption and those riding a procurement wave that could reverse when enterprise budgets tighten. The technology sector has faced sustained valuation pressure from rising Treasury yields through most of August, and the broader Nasdaq has struggled in September’s opening sessions. Against that backdrop, three consecutive quarters of accelerating product revenue growth carry a specific weight: they are not an artifact of easy comparisons or a single large deal, but a recurring signal arriving in the same direction.
The competitors in Snowflake’s space — Databricks on the open-source data lakehouse side, Google BigQuery, Microsoft Azure Synapse — have not yet reported comparable periods. Whether CoCo’s enterprise penetration rate reflects Snowflake-specific execution or a broader shift in how enterprise developers are adopting AI coding tools is a question that will take more than one earnings cycle to answer. As of Wednesday’s close, the S&P 500 has closed lower in two of September’s first three sessions on a combination of oil-price pressure and Fed rate expectations. Snowflake’s 22% single-session gain was the most decisive counterpoint the technology sector produced all week.
