Snowflake Stock Up 49%. Learn Whether AI Agents Make $SNOW A Buy

Snowflake stock is up more than 49% in 2025, but could it rise more?

Despite worries about a looming AI bubble bolstered by rising valuations, an MIT report highlighting low return on AI investments, and strong competition from Databricks and others; Snowflake stock will likely rise higher if the company keeps beating expectations and raising guidance.

Here are three for optimism about an increase in its stock:

• Expectations-beating Q2 growth.
• Strong growth leadership from new CEO.
• New AI services.

Snowflake is happy with its performance and prospects. “Snowflake delivered yet another strong quarter, with product revenue of $1.09 billion, up a strong 32% year-over-year, and remaining performance obligations totaling $6.9 billion,” Snowflake CEO Sridhar Ramaswamy said in an August 27 release.

“Thousands of customers are betting their business on Snowflake and more than 6,100 accounts are using Snowflake’s AI every week. We have an enormous opportunity ahead as we continue to empower every enterprise to achieve its full potential through data and AI,” he added.

Snowflake’s Expectations-Beating Q2 Growth

Snowflake beat expectations for growth and raised guidance – which in my view is the key to a rising stock price.

Snowflake’s second quarter revenue of $1.14 billion rose 32% from the year before and beat FactSet expectations by $50 million. The company’s adjusted earnings of 35 cents a share were eight cents above consensus.

For the current quarter, Snowflake predicted revenue in a range – the midpoint of which is $1.126 billion – $60 million higher than consensus, according to Barron’s.

Snowflake raised its 2025 product revenue forecast to $4.4 billion – $60 million more than Wall Street estimates, noted Barron’s.

Strong Leadership From New CEO

Ramaswamy is the third Snowflake CEO I have interviewed and he seems to be reviving the growth spurred by the first one: Bob Muglia, a Microsoft veteran who joined as CEO in 2014 and took the company close to the brink of its IPO. In May 2019, Frank Slootman – who had previously taken ServiceNow public, took over from Muglia, as I wrote in a November 2019 Forbes post.

Founded in 2012, Snowflake’s September 2020 IPO was the largest ever by a software company – raising $3.4 billion. But Snowflake stock fell in 2022 as analysts “questioned its lofty valuation amid decelerating revenue growth,” noted Investor’s Business Daily.

In February 2024, Snowflake appointed Ramaswamy as its new CEO. Snowflake acquired Ramaswamy’s AI startup Neeva and made him a senior vice president. I interviewed Slootman and Ramaswamy before the latter became CEO and came away with the feeling Slootman felt the Neeva founder would be better positioned to capture the AI opportunity, noted a June 2024 Forbes post.

When I first spoke with Ramaswamy, I was uncertain whether he would be up for the challenges of running a public company. But those doubts faded – especially last November after I attended an AI conference in San Francisco where a Snowflake manager praised his ability inspire the company to build AI services aimed at solving customer problems.

New AI Services Targeting Financial Services

Ramaswamy is still driving product innovation. On October 2, Snowflake announced a new AI product – Cortex AI for financial services – a set of AI tools for banks, insurers and investment firms, noted a company release.

Snowflake sees Cortex AI giving financial services customers – such as Bloomberg, Morgan Stanley, Goldman Sachs, and JP Morgan – an advantage. “The financial services industry is an adopter of leading edge technology that gives them an edge,” Ramaswamy told me in a September 26 interview.

Snowflake’s product is playing catch up with a rival – Databricks which has been developing solutions for specific industries since 2022. Databricks “now has more than a dozen industry- and function-specific platforms, although not all are AI-focused,” reported CRN.

Snowflake decided to start a push into vertical markets with financial services due to strong demand and Snowflake’s large share of the market. “These are customers that are using our AI products heavily, so we wanted to make these solutions a lot easier for them to consume,” Snowflake Vice President of AI Baris Gultekin told CRN.

Snowflake’s offering allows financial institutions to build AI models and agents securely while also drawing from external sources – such as FactSet, MSCI, the Associated Press, Washington Post and Investopedia. The combination of internal and external data can plug into AI chatbots such as Cursor, Anthropic and ChatGPT through Snowflake’s Model Context Protocol server, explained Gultekin.

Lexington Partners, a $76 billion assets under management alternative asset management firm, is testing out Cortex AI. “At Lexington Partners we are creating AI agents using Cortex AI to turn natural language prompts from end users into SQL code that extracts data from Snowflake,” Lexington’s Director and Head of Data & AI Richa Singh told me in an October 1 interview.

Lexington is still testing Cortex AI and expects to make it available to users in 2026. “We have not rolled it out yet,” Singh said. “We are testing it. If we see an error, we add more context into the semantic model. As we add more data, we will build more semantic models.”

Singh previously worked at Goldman Sachs for a decade according to her LinkedIn profile, and has a good feeling about Snowflake. “I have seen the journey when Goldman replaced an on prem data warehouse with Snowflake. When I heard about Cortex AI I thought ‘I trust in Snowflake. Let’s give it a try.’ Snowflake has been very supportive,” she added.

Morgan Stanley wrote Snowflake is preparing to launch a service called Snowflake Intelligence that allows users to engage in natural language conversations with all of their structured and unstructured data. “CEO Ramaswamy called Snowflake Intelligence the most important thing that Snowflake is doing as a company today,” said Morgan Stanley analyst Sanjit Singh in a report featured by IBD.

“The key opportunity behind Snowflake Intelligence is that it directly exposes Snowflake to a much wider audience whereas historically Snowflake was hidden behind dashboards and business intelligence tools like (Salesforce’s) Tableau,” Singh added.

Ramaswamy is personally getting significant value from AI agent technology. “I use Raven – a sales agent – to ask questions from SalesForce and WorkDay before showing up for a meeting with customers,” he told me. ”It makes it so much easier to get at the information I want. With Raven I can have six tabs open and ask interesting questions.”

What Analysts Are Saying

Many analysts have bullish comments about Snowflake.

Following Snowflake’s Q2 report, Evercore ISI raised its price target to $280. “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 last month. “There is room for further upward revisions to guidance and Street estimates,” he added.

D.A. Davidson pointed out Snowflake’s competition from Databricks – which recently announced an August funding round valuing the company at $100 billion – some $20 billion more than Snowflake’s value. “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,” D.A. Davidson analyst Gil Luria wrote in a note on Aug. 25.

“So while we acknowledge the concern over competition, we believe that it is nothing for investors to lose sleep over,” he added.

Finally, Morgan Stanley was also bullish. Snowflake is the “best way to play the data modernization theme in Software,” according to an August Morgan Stanley report featured in IBD. “Customers are investing aggressively in data modernization/ transformation initiatives – not just to move to the cloud, but increasingly because progress on their AI ambitions is impossible without them,” added Morgan Stanley’s report.

In my interview last month, Ramaswamy did not shed light on how much additional revenue Cortex AI or Snowflake Intelligence would add to the company’s top line.