11 hours ago
Snowflake Inc. (SNOW): A Bull Case Theory
We came across a bullish thesis on Snowflake Inc. (SNOW) on Sergey's Substack. In this article, we will summarize the bulls' thesis on SNOW. Snowflake Inc. (SNOW)'s share was trading at $209.12 as of 16th June. SNOW's forward P/E was 185.19 respectively according to Yahoo Finance.
A software company's engineer staring at a computer monitor with intense concentration.
Snowflake is rapidly evolving from a data warehouse into an AI-native data cloud platform, with significant momentum under CEO Sridhar Ramaswamy. In Q1 FY2026, Snowflake accelerated innovation with over 125 new product launches—a 100% YoY increase—including Cortex Analyst and Agent, which enable natural language queries and AI workflows.
The company is also repositioning its Marketplace as a core distribution hub for AI-native apps, now supporting agentic workflows through Cortex Knowledge Extensions and seamless data ingestion via OpenFlow. While new listings slowed, this reflects a shift toward higher-quality offerings as Snowflake updates its revenue-sharing and governance models.
Cortex now supports top-tier LLMs like Llama 4 and OpenAI on Azure, powering weekly usage by over 5,200 enterprises, including BlackRock and WHOOP. Gen2 compute and AISQL offer major performance and cost improvements, while Data Science Agent and Semantic Model sharing extend ML accessibility and consistency. Strategic acquisitions like Crunchy Data strengthen transactional and public sector capabilities, where Snowflake recently secured DoD-level authorization.
Customer momentum remains strong: 419 net adds (+18% YoY), 26 new $ 1 M+ ARR clients, and two $ $100 M+ deals. Industry wins include AstraZeneca, Dentsu, Siemens, Samsung Ads, and Kraft Heinz. Retention remains best-in-class at 124%, with net new ARR up 4% YoY and RPO growing 34.3%. Despite lower FCF margins (17.6%) and high SBC (39% of revenue), Snowflake's ongoing shift to back-end weighted consumption and active buybacks reflects disciplined capital management.
With high switching costs, a growing network effect (39% of usage now data sharing), and increasing AI adoption, Snowflake's long-term competitive moat appears to be deepening.
Previously, we highlighted a bullish thesis on Snowflake Inc. (SNOW) from Compounding Your Wealth, which framed the company as an enterprise data leader accelerating growth through AI integration, margin expansion, and robust platform adoption across sectors like financial services and public institutions. Sergey's thesis builds on this foundation, emphasizing Snowflake's transformation into an AI-native data cloud platform under new CEO Sridhar Ramaswamy. It underscores how Snowflake's 125+ product launches, such as Cortex Agent, Gen2 compute, and OpenFlow, are redefining its value proposition and extending its reach into high-performance analytics and AI-native app distribution.
Snowflake Inc. (SNOW) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 94 hedge fund portfolios held SNOW at the end of the first quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of SNOW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
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