Shares of Snowflake ( SNOW ) have taken a beating in recent weeks. With a market value of $57.6 billion, SNOW’s stock is down more than 40% from its 52-week high, but analysts think it could recover those losses, and then some. The sales of the software sector is very broad and some would argue, undifferentiated.
But one major Wall Street firm says the market is missing the forest for the trees and that the ongoing rebound may now be a buying opportunity in the artificial intelligence space.
Here’s what investors need to know.
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Recent AI-driven sales have spared no one. Evercore ISI analyst Julian Emanuel put it plainly in a note to investors on Monday, calling the market’s recent attitude “sell first, ask questions later.”
The company argued that the shares were targeted without regard to the company’s “business model, strategy, moats or AI revenue potential.” This lesser punishment may not be fair to all the companies caught in the riot.
Evercore ISI picked Snowflake as one of eight stocks best positioned to benefit from AI picking. The company specifically named SNOW stock “scaffolding” alongside Microsoft ( MSFT ), meaning it sees the company as the critical underlying infrastructure for enterprise AI, not just another application that hypes up.
Analyst Kirk Mattern said most investors will take a “wait and see” approach but that there is a real disconnect between how the market is treating software stocks and what the fundamentals are actually showing.
Snowflake is a cloud-based data platform. Think of it as the place where large companies store, organize and analyze their most valuable data. Its customers pay based on how much computing they use, rather than a typical monthly fee.
This distinction is important. As companies push to deploy AI tools internally, they need a reliable, secure foundation to run these tools on.
And preliminary results for its fiscal fourth quarter 2026 earnings, reported on Feb. 25, suggest the bet is paying off.
Product revenue rose 30% year-over-year (YoY) to $1.23 billion.
The company added 740 net new customers in the quarter alone, up 40% YoY.
And remaining operating liabilities, primarily contracted future revenues, reached $9.77 billion, with growth accelerating to 42%.
“Snowflake sits at the center of the company’s AI revolution,” CEO Sridhar Ramaswamy told investors on the earnings call.
The company also signed the largest contract in its history, worth more than $400 million with a single financial services client, with nine more contracts in the quarter. By comparison, it has signed only two contracts that are bigger in the same period last year.
What’s driving growth isn’t just business data. New AI products are seeing rapid adoption.
Snowflake Intelligence, an agent-based tool that allows employees to ask business questions in plain language, reached more than 2,500 accounts in just three months, nearly doubling from the quarter. More than 9,100 accounts now use some form of AI on the platform.
Meanwhile, Cortex Code, a coding agent that helps developers create and automate data workflows, has been adopted by more than 4,400 customers. Ramaswamy described its impact on domestic productivity as a compression of development cycles that once took weeks into days. A friend wrote to the company that before Cortex Code, they were “using shovels to dig,” and Snowflake “just gave them bulldozers.”
Such real-world testimony supports what Evercore ISI says it sees: Companies that build basic AI protections around “orchestration, secure enterprise guards, and agentic execution across siled data are destined for better performance.”
Evercore ISI’s top position, coupled with Snowflake’s guidance for product revenue growth of 27% in fiscal 2027, pegged at roughly $5.66 billion, making the case that the sale really created value.
The data analytics platform also expects operating margin to expand from 10.5% in fiscal 2026 to 12.5% in fiscal 2027, and stock-based compensation is expected to fall from 34% to 27% of revenue: two signs of improving financial discipline.
Analysts forecast SNOW stock to end fiscal 2031 with free cash flow of $4.68 billion, up from $1.36 billion in 2026. If SNOW’s stock price is 35x forward FCF, which is lower than the current 42x multiple, it should gain 160% over the next four years.
Of the 45 analysts covering Snowflake stock, 36 recommend a “strong buy”, three recommend a “moderate buy”, four recommend a “hold”, and two recommend a “strong sell”. The average SNOW stock price target is $237.26, about 40% above the current price of around $167. However, a high price target of $325 means that SNOW could rise as much as 94%.
However, consumption-based models can be unpredictable. And the company is still early on in integrating its recent $600 million acquisition for visualization platform Observe. But for investors with a longer-term horizon who believe the company’s AI adoption is accelerating, Snowflake’s current valuation after the sale may offer an attractive entry point.
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As of the date of publication, Aditya Raghunath did not hold positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
