Bank of America Tweaks Snowflake Stock Price Target after Earnings

Snowflake (SNOW) is beginning to change how Wall Street perceives it. The company's recent quarter demonstrated solid growth and hinted at a larger transition.

The stock, which last closed at $241, has divided opinion among bears and bulls.

Doubters still see it as an expensive analytical tool while believers argue Snowflake is on its way to becoming something bigger, a bellwether for the cloud-based data storage industry.

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What matters today is not a single earnings beat but whether Snowflake can become a permanent fixture in businesses' data use.

Fortunately, Bank of America, one of Wall Street's biggest firms, recently weighed in on the debate, and importantly, what may happen to Snowflake's stock next.

Snowflake makes its mark as investors debate its future in the AI-driven data economy.

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Snowflake is an AI giant

AI relies on clean, regulated data. Snowflake Data Cloud allows teams to prepare features, store embeddings, and conduct inference where the data already exists — rather than stitching together a dozen systems.

That is why the story has moved from “data warehouse” to an enterprise AI operating layer that includes analytics, machine learning, collaboration, and applications. Recent progress backs it up.

Snowflake has released AI-first features that reduce lift for builders in the last six months, including Cortex AISQL (LLM in SQL), Snowflake Intelligence & Data Science Agent (agentic workflows), Openflow for data interoperability, and governance/compute upgrades to speed up warehouses and tighten policy controls.

It also purchased Crunchy Data to provide an enterprise PostgreSQL service inside the AI Data Cloud, collaborated with Acxiom to enable AI marketing, and passed Canada's CCCS Protected B threshold, which is beneficial for public-sector AI.

These solutions are consolidated into a single, controlled platform that clients can expand with native applications and marketplace data, keeping sensitive information secure as teams move from concept to production more quickly.

BofA sees turning point for Snowflake

Bank of America’s latest research note on Snowflake argues the second quarter was a turning point — one that shows the company is evolving into a true enterprise data platform.

Product revenue increased 32% year over year, up from 25% in the previous quarter. BofA said that although Snowflake's core analytics market continued to drive progress, a better competitive position also contributed.

Customer additions increased by 18%, showing demand is growing, even as competitors push into cloud data.

Clients are increasingly viewing Snowflake as a platform for diverse workloads such as analytics, data science, collaboration, and AI, according to the research note. This broader positioning may lead to larger growth agreements ahead.

Net revenue retention (NRR) also provided a positive signal. After 13 consecutive quarters of decline, NRR ticked up to 125% from 124%. BofA said strong analytics transactions led the gain, while early traction in related workloads added confidence.

Snowflake's growth, cash flow, and valuation premium

Snowflake maintained its adjusted free cash flow margin target at 25%. BofA, however, pointed to the potential for margin expansion as scale grows, citing Snowflake’s ability to generate free cash flow at one of the fastest rates in the software industry.

The bank called it the “best in class FCF compounder” among large-cap rivals, with a two-year CAGR of 31% projected through 2026.

That forecast underpinned BofA’s decision to lift its price target from $240 to $280 while maintaining a buy rating. The revised goal is based on a 2026 free cash flow multiple of 58x, or 1.9x after accounting for 33% growth.

In comparison, the broader large-cap software group trades at roughly 28x, or 1.6x for 23% growth — making Snowflake’s premium appear justified.

The quarterly results “validate our view that Snowflake is making the leap to becoming a true data platform in the large enterprise,” concluded analyst Brad Sills.

Inside Snowflake’s latest earnings

Snowflake reported another quarter of great growth. Although profitability under Generally Accepted Accounting Principles (GAAP) remains a weak point, non-GAAP earnings rose substantially.

Revenue of $1.145 billion, up 32% year over year.
Non-GAAP net income of $129 million, up from $63 million one year ago.
Gross margin of 76%, in line with one year ago.
Non-GAAP operating margin of 11%, up from 5%.
Earnings per share of 35 cents, up 94% year over year.

Product sales reached $1.09 billion in Q2 FY26, a 32% increase over the previous year.

The company's net revenue retention rate of 125% indicates that current customers are spending more, and the roster of large clients continues to grow — 654 customers now generate more than $1 million in annual sales, a 30% increase.

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Future demand is strong, with $6.9 billion in outstanding performance commitments, a 33% increase year on year.

This indicates a robust sales funnel as Snowflake increasingly integrates into the company's data strategy.

However, the bottom line shows a different narrative. Snowflake reported a GAAP operational loss of $340 million, but non-GAAP profit was just $128 million, or an 11% margin.

Free cash flow was barely $58 million, or around 5% of sales. Product sales growth is expected to decelerate to 25% to 26% in Q3, down from 32% in Q2.

The company's long-term strategy is straightforward: It wants to be the foundation of AI-driven data. However, investors must continue to strike a balance between quick development and true profitability.