Earlier this year, artificial intelligence seemed to pose a serious threat to business software stocks.
Investors feared the more powerful AI agents would replace sections of conventional software, leading to what was later dubbed the “SaaSpocalypse.” Snowflake (SNOW) was one of the firms caught up in the selloff.
Now, Snowflake gives Wall Street a radically new reason to think about AI.
Shares jumped 17% on Sept. 3, to $356.56, after rising as much as 26% during the session, following fiscal second-quarter results that exceeded Wall Street expectations.
Snowflake’s product revenue increased 37% year over year to $1.49 billion, while total revenue reached $1.55 billion. Adjusted earnings of 62 cents per share also surpassed the 45 cents analysts expected.
The stock is now up roughly 62% in 2026.
The rally was all about the $1.49 billion sum.
But the real surprise may be what’s causing that acceleration.
Snowflake’s AI business changes the story
Snowflake’s product sales growth has risen for three straight quarters, the business said.
More crucially, CEO Sridhar Ramaswamy said AI was the reason for around half of Snowflake’s recent growth acceleration, indicating the technology that investors previously worried may upend software businesses is turning into a more significant growth engine for Snowflake.
One of the clearest examples is Cortex Code, also known as CoCo, Snowflake’s AI coding assistant.
CoCo gained more than 2,000 accounts throughout the quarter, bringing adoption to more than 9,100 accounts, Business Insider said. Snowflake’s corporate AI solution, CoWork, has also seen fast growth, topping more than 5,800 accounts.
Why it matters: Snowflake’s AI potential isn’t just about charging consumers for point AI technologies.
AI solutions need massive volumes of corporate data. As clients create more AI applications on Snowflake, such workloads might drive higher consumption of Snowflake’s underlying data platform.
That creates a potentially strong economic loop: AI tools drive greater use, and that utilization drives more demand for the main platform.
Related: Morgan Stanley resets Snowflake stock price target by $170
And the figures are starting to show that dynamic.
Snowflake revised its fiscal 2027 product-revenue projection to $6.07 billion from a prior outlook of $5.84 billion, Reuters reported . That’s an annual growth rate of almost 36%.
Snowflake is starting to make the opposite argument for investors who spent months fretting that AI will eat conventional software.
Bloomberg / Getty Images
Wall Street sees a much bigger AI signal
Snowflake’s achievements weren’t simply about earnings from one firm.
They supplied statistics on one of the biggest AI arguments on Wall Street: whether all the expenditure on chips and data centers is really converting into use of corporate software.
UBS analyst Karl Keirstead said Snowflake’s results, combined with growth acceleration at Palantir and Databricks, provided “compelling evidence of strong enterprise AI adoption.”
Following the revelation, Bank of America and Deutsche Bank boosted their price estimates on Snowflake.
Deutsche Bank raised its target to $400 from $350 and maintained its Buy rating, citing growing AI usage and persistent consumer trends.
The bullish response didn’t end with Snowflake.
Snowflake’s earnings boosted optimism toward the larger software industry, helping boost ServiceNow, Salesforce, and Adobe, Reuters reported. At least 34 brokerages boosted their price goals on Snowflake, with Wells Fargo raising its objective as high as $525.
More AI:
- Nvidia just made a move Wall Street wasn’t ready for
- Microsoft just took sides in AI policy fight
- OpenAI just disclosed something genuinely alarming
That response from Wall Street shows why Snowflake’s quarter matters beyond the 17% jump in its shares.
The AI trade has been mostly driven by infrastructure businesses that provide the processors, networking gear and data centers.
Snowflake suggests that the next step might be taking place farther up the tech stack.
Snowflake turns an AI threat into a growth engine
That response from Wall Street shows why Snowflake’s quarter matters beyond the 17% jump in its shares.
The stock now has higher expectations, and the firm confronts stiff competition from Microsoft, Databricks, and other cloud data platforms.
Snowflake also has to show that the rapid take-up of AI translates into durable revenue growth, not just headline-grabbing use numbers.
But the company’s recent quarter gives investors something they lacked during the SaaS selloff: compelling proof that standard artificial intelligence can help an established software firm go faster.
Product revenue increased 37%. Management raised its annual forecast. Thousands more customers adopted Snowflake’s AI tools. And the CEO says AI is responsible for roughly half of the recent acceleration.
Those figures shift the conversation significantly.
Investors were wondering this year if AI agents would make legacy software businesses less valuable.
Now there is another alternative, Snowflake.
When corporations adopt AI, the firms that own enterprise data may increase in value, since every smart app requires access to verified corporate information.
Related: Snowflake Inc. Q2 2027 Earnings: Live Updates of $SNOW Earnings Call, Forecast
