Snowflake Stock Soars After Earnings. What’s Got Everyone Excited.

Sridhar Ramaswamy, chief executive officer of Snowflake. (Kent Nishimura/Bloomberg)

Snowflake stock popped after the cloud-based storage company reported better-than-expected earnings and issued upbeat guidance.

Snowflake reported second-quarter adjusted earnings of 35 cents a share from revenue of $1.14 billion. Analysts surveyed by FactSet were expecting earnings of 27 cents a share on revenue of $1.09 billion.

Snowflake also said it expects third-quarter product revenue to be between $1.124 billion and $1.13 billion, compared with the consensus call for $1.121 billion.

For the year, Snowflake expects product revenue to be $4.4 billion. That is above the previous estimate of $4.33 billion the company provided when reporting earnings last quarter, and higher than Wall Street estimates of $4.34 billion.

“We have an enormous opportunity ahead as we continue to empower every enterprise to achieve its full potential through data and AI,” CEO Sridhar Ramaswamy said in the earnings release.

Snowflake stock jumped 13% to $227.27 in Thursday’s premarket.

“The combination of accelerating revenue growth and operating margin leverage can drive further multiple expansion from current levels,” Evercore ISI analyst Kirk Materne wrote in a note on Wednesday, raising his price target to $280 from $240 and maintaining an Outperform rating. “There is room for further upward revisions to guidance and Street estimates,” he added.

BTIG analyst Gray Powell raised his price target on the stock to $276 from $235. He called the second-quarter results “exceptional,” and said Snowflake would be “a clear beneficiary of AI as companies work to centralize their data to build applications.” Powell rates the stock Buy.

Shares of Snowflake—which gives businesses a place to organize, store, and secure their data to help power artificial intelligence—have climbed 30% this year amid investor enthusiasm about the company’s position in the AI race.

However, as of Wednesday’s close, shares had dropped 11% from their 2025 peak of $225.79 on July 7. Wall Street analysts are evaluating if there is an AI bubble, after OpenAI CEO Sam Altman’s recent comments on investors being “overexcited about AI” and a research paper from MIT that warned of a lack of returns on AI investments.

Snowflake also continues to face industry competition. One of its rivals, the cloud-based data processing firm Databricks, announced earlier this month that it’s completing a funding round that would value the company at $100 billion—or 61% higher than its last funding round in December. Snowflake has a market capitalization of about $65 billion.

“Both companies have plenty of space in their respective swim lanes, with Snowflake moving increasingly more into Databricks’ swim lane to capture more of the [artificial intelligence/machine learning] growth. So while we acknowledge the concern over competition, we believe that it is nothing for investors to lose sleep over,” D.A. Davidson analyst Gil Luria wrote in a note on Aug. 25, ahead of earnings. He rates Snowflake as a Buy with a $250 price target.

Write to Angela Palumbo at angela.palumbo@dowjones.com