Wall Street does not usually turn on a stock this fast.
Earlier this year, Snowflake (SNOW) was one of the names investors turned away from when they decided artificial intelligence might break the software business.
SNOW stock fell hard, and the story around it was almost entirely about what AI could take away.
On July 29, one of the banks that helped shape that worry told clients it had the whole thing backwards.
Snowflake shares climbed on the news, and the number attached to the call stood out even in a market full of aggressive AI targets.
The price target sits above every other estimate on Wall Street, and it rests on an idea about where enterprise spending is heading next.
The reasoning behind that number, and what it would take for the stock to actually get there, is worth a closer look.
Wells Fargo just set the highest Snowflake price target on Wall Street
Wells Fargo told Snowflake investors something on July 29 that the bank itself would have rejected a few months ago.
Artificial intelligence, the same force blamed for gutting the stock earlier this year, is now the reason to buy it.
The bank kept its Overweight rating and lifted its price target to $500 from $320, CNBC reported.
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That is the highest target on Wall Street, and it implies close to 85% upside from the July 28 close of $270.36.
Analyst Ryan MacWilliams framed the call in four words: “The game has changed.”
His point is that AI agents are pushing customers to spend more on Snowflake, not less, and that most investors have the direction of that trend backwards.
Cheng Xin / Getty Images
Why Wells Fargo flipped its Snowflake argument on AI
Earlier this year, investors worried that AI would break the software-as-a-service model, the subscription approach that charges companies per user or per seat.
Investors were afraid that if AI agents replace human seats, seat-based software collapses.
That fear had a nickname on Wall Street: the SaaSocalypse. It sent Snowflake down more than 44% at one point.
MacWilliams now argues the second quarter proved the opposite. As Snowflake’s AI coding tools and agents came online for customers, spending went up rather than down.
A Wells Fargo survey of Snowflake customers found three things happening at once:
- AI is driving businesses to spend more on the platform than before
- Product usage is climbing as customers lean on those tools
- Companies are uploading more of their data to Snowflake so it can feed their AI systems
That last point matters most. Snowflake stores the data that AI models need to be useful inside a business, which turns the AI boom into a demand driver instead of a threat.
What “no capex, no model dependence” actually means for you
MacWilliams described Snowflake as a near-term AI beneficiary “without capex requirements or model dependence.”
That line carries more weight than it looks.
Capex, short for capital expenditure, is the money a company spends on physical infrastructure like data centers and chips.
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Firms racing to build their own AI models are spending enormous sums on it, which eats into cash flow.
Snowflake sits above that spending. It does not need to build the most expensive infrastructure or bet on one winning AI model. It can benefit from rising AI usage without carrying the same costs.
For an investor, that is the practical appeal. Snowflake can ride demand from every model its customers choose, rather than living or dying by a single one.
How far Snowflake stock has already run
The market has been closing this gap for months, well before the July 29 note.
Snowflake has climbed about 24.76% year to date, and shares jumped more than 5% on July 29 to about $284.75 after the upgrade. It reached an intraday high near $289.81.
That recovery gives the $500 target its context. The stock fell hard, found a floor, and has been grinding back as the AI-disruption fear faded.
Snowflake’s numbers have supported the move. In the fiscal first quarter, Snowflake reported revenue of $1.39 billion, up 33% from a year earlier.
Product revenue also rose 34%, and remaining performance obligations climbed 38% to $9.21 billion.
MacWilliams believes that combination deserves a higher premium.
He said Snowflake should trade closer to Cloudflare (NET) and CrowdStrike (CRWD), which carry forward earnings multiples of 204 and 139, against Snowflake’s 127, CNBC reported.
The case that could still go wrong
A $500 target is a bet, not a promise, and the risks are real.
Competition is the clearest one. In June, BNP Paribas analyst Stefan Slowinski noted that Databricks keeps gaining ground in Snowflake’s core market for SQL.
Valuation is the other. At 127 times forward earnings, Snowflake is priced for strong execution.
Any slip in growth could compress that multiple quickly, the same trap that has weighed on Palantir (PLTR) even as its revenue climbs.
MacWilliams holds a modest track record by some analyst rankings, so the $500 figure is a high-conviction call rather than a consensus one.
What Snowflake investors should watch next
The bull case now rests on a single question: does AI keep pulling spending toward Snowflake, or does it eventually pull spending away?
A few concrete markers will answer that question.
- Next earnings: whether product revenue growth holds above 30% and net revenue retention stays strong
- Databricks pressure: any sign that competition is slowing Snowflake’s data-warehouse momentum
- AI usage data: confirmation that customers keep uploading more data and running more AI workloads on the platform
For readers considering the stock, Wells Fargo’s $500 call is just the boldest version of the same bet everyone’s making now: that AI grows Snowflake’s business instead of shrinking it.
If that call holds through the next earnings report, the highest target on Wall Street starts to stand out less.
If the bet fails, a stock trading at 127 times earnings has a long way to fall.
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