Today witnessed another surge in Snowflake's stock value.
Today witnessed another surge in Snowflake's stock value.
Recent events indicate that data company Snowflake (SNOW dropping by 1.57%) recently disclosed its financial performance for the third quarter of 2025. The market reacted positively, leading to a considerable surge in Snowflake's stock price. As of 10 a.m. ET, the stock is climbing further, with a 4% increase. However, it had risen even more during earlier hours of the day.
Wedbush analyst Dan Ives published a report this morning, suggesting that artificial intelligence (AI) is significantly transforming the software industry. He singled out Snowflake as a significant beneficiary of this trend. Consequently, he recommended purchasing Snowflake shares and set a target price of $190 per share, representing an additional 9% increase over the current price.
Can AI fuel Snowflake's expansion?
Linking Snowflake to the potential of AI isn't a novel concept. Initially, the company was content with merely being known as "the Data Cloud company." However, at the beginning of its 2025 financial year in February, it switched its self-description to "the AI Data Cloud company."
Although the AI potential hasn't directly translated into Snowflake's financial performance as of now—as depicted by the graph below—the company's growth rate has continued to decline while the AI sector is witnessing an upward trend.
Nevertheless, the latest earnings season has revealed that AI products and tools are acting as catalysts for growth across various software firms. This is why Ives is focusing on several companies poised to profit, including Snowflake, which explains the stock's surge today.
The figure drawing attention
Snowflake CEO Sridhar Ramaswamy opened the Q3 earnings conference call by mentioning, "Our AI-related feature family, Snowflake Cortex, is experiencing significant adoption." Although the revenue growth rate decreased, this claim is still validated by the facts.
Similar to many software companies, Snowflake's customers make an upfront payment for the software and subsequently utilize it throughout the contract period. This contractual revenue is referred to as Snowflake's Remaining Performance Obligations. The Q3 obligations soared to $5.7 billion, representing a remarkable 55% year-on-year increase. Therefore, Ives' optimism and the investors' enthusiasm are justified.
In light of the analyst's report and the Q3 earnings, some investors are considering investing more money into Snowflake, believing that its focus on AI could significantly boost its growth in the future. The company's strong financial performance, as indicated by the substantial increase in its Remaining Performance Obligations, further fuels this optimism.
Given the recent market trend and the potential of AI in transforming the software industry, investors are keen on financing Snowflake's expansion, hoping that the company can leverage AI to reverse its declining growth rate and reap the benefits of the sector's upward trend.