Why Is Snowflake Stock Soaring, and is it too Late to Buy? | SNOW Stock Analysis

Added: 2026-06-01

[00:00:00]Snowflake stock is soaring by 36% in the after-market hours following the company's quarterly financial update. Of course, I'm happy about that because I recently upgraded Snowflake's stock to a buy, and congratulations to those of you that purchased stock after watching those videos.

[00:00:18]In this video, I'll review what is sending Snowflake stock soaring, the precise causes for this share price increase, how I'm changing my fair value calculation for the company following this update, and whether or not I still think it's a buying opportunity, or if it's too late to buy Snowflake stock.

[00:00:38]>> I want to thank The Motley Fool for sponsoring this video. Visit fool.com/parKev for the 10 best stocks to buy now.

[00:00:46]>> So, you can see the price action here in the after-market hours, Snowflake stock jumping by nearly 36%.

[00:00:53]A huge increase for this company that was was put into the bucket of those software stocks that are going to be killed by artificial intelligence and was selling at a significant discount heading into this earnings release. And of course, as I do with all of my recommendations, I keep track of the buy, hold, or sell rating and the date I updated that rating so that you can keep track of my performance as well. Just so there's transparency in my recommendations, unlike many other YouTubers who just focus on the stocks that they picked that are winners and just neglect and don't talk about any of their losers anymore to make it seem like all they ever do is pick winning stocks, which is not the reality in most cases and actually in every case. So, in on May 15th, 2026 is when I last updated my buy rating for Snowflake stock, and I, you know, over the last few months I had been covering Snowflake few times and reiterated that by rating after upgrading the stock to a buy for the first time here in 2026.

[00:02:05]Snowflake reported a net revenue retention rate of 126% and this is phenomenal.

[00:02:11]This number measures how much existing customers spend with Snowflake in their second year of service compared to their first year of service.

[00:02:22]So, net revenue retention rate of 126% means that customers spend 26% more in their second year compared to their first year or in subsequent years. And what this means to me is evidence of a strong customer value proposition. If these customers were not feeling like they were getting a great value, they would not be increasing their spending with Snowflake. And this is an indication of the sustainability of the company's revenue growth in future years.

[00:02:51]Additionally, they reported remaining performance obligations of 9.21 billion dollars, which was 38% higher than the same time last year. And you've heard me talk a lot about how positive it is to see a company's RPO come in at above its revenue growth. It suggests that acceleration might be in the works for the company's revenue growth rate, which was already pretty strong at 33% year over year.

[00:03:19]The management team said that AI continues to be a powerful tailwind for Snowflake and first quarter marks a clear inflection point in that journey.

[00:03:29]And investors were finally convinced.

[00:03:31]Finally. I say that because nearly every software company has been saying the same thing that AI is a tailwind. You hear Adobe, ServiceNow, Salesforce all talking about the same thing how AI is going to help their business, but they are failing to convince investors. Even Salesforce, which reported what I thought were also pretty good results today, I evaluated that company's results before I evaluated Snowflake, and when I was looking at Salesforce, the stock price was up by about 3/4 of 1% following their earnings announcement, and the share price is still down significantly since the software stock sell-off in early 2026.

[00:04:15]So, those companies, those software companies are failing to convince investors that AI is a tailwind, and up until today, Snowflake, too, was failing to convince investors that AI will be a tailwind. But, that all changed today with the share price jumping by 35%.

[00:04:34]That's an indication that the market is now repricing artificial intelligence as an opportunity instead of a risk for Snowflake. The company's saying, "Given the strong momentum across their platform business and AI business, we are raising our full-year product revenue guidance." They added 616 net new customers in the quarter, which is up 38%, including 13 huge companies that are in the Forbes Global 2000.

[00:05:03]Additionally, the big headline number that came out of this quarterly update is a huge deal with AWS from Amazon with the new $6 billion multi-year agreement designed to accelerate enterprise AI adoption globally.

[00:05:18]That [snorts] 6-year agreement, of course, is a large percentage of the company's overall remaining performance obligations that totaled $9.21 billion.

[00:05:29]Looking at the full year, they're forecasting 31% revenue growth overall.

[00:05:34]That's up from the previous estimate of just 27% growth. The non-GAAP operating margin is now expected to be 13.5%, up from the previous estimate of 12.5%.

[00:05:46]And the adjusted it free cash flow margin is expected to come in at 23%.

[00:05:52]So these are excellent numbers and excellent growth rates from Snowflake.

[00:05:56]And the real reason why Snowflake stock was trading at a discount coming in was that risk from AI. The business had been doing relatively well. It had been decelerating revenue growth, but that's been the case with many companies as the US economy and worldwide economy has slowed down since the start of 2025 following the initiation of global tariffs. And following that, we had wars and we had increasing geopolitical tension. All of that had been bringing down global economic growth and inflation increasing. And so amid that kind of backdrop, nearly every business not related to or not directly in the center of artificial intelligence was experiencing a slow down. So when we measure Snowflake on a forward price to earnings, it's now at 84, near the lowest level that had been going all the way back to January of 2024. And on a forward price to operating cash flow at 36 is also near the low it's been in a few years. And again, the primary reason for that was the risks that the market was placing on this company connected to artificial intelligence. And of course, I had been saying that those risks were overblown and that Snowflake was an excellent buying opportunity coming into this earnings release. So following the earnings update, I incorporated some of these positive developments and raised my free cash flow estimates for the company in the future years upcoming.

[00:07:30]And that increased my intrinsic value per share to about $203.

[00:07:36]The market price was $175 at market close, but you can see in the after-market hours, it's jumped to over $237 per share, which would be above my intrinsic value per share. However, [snorts] that being said, I'm likely to continue working with my discounted cash flow model here, and I will be revising further. I think one future estimate adjustment I will be making here is an adjustment to the risk profile associated with Snowflake. I'm likely to adjust the risk lower given the company's position vis-a-vis artificial intelligence now being reflected in market perceptions. So, I'm likely to lower the risk estimate, which would also increase the intrinsic value per share because that's the denominator I use to discount all of the company's cash flow back to the current moment.

[00:08:32]So, for now, I will be reiterating my buy rating for Snowflake stock. I still think it's an opportunity. I still don't think it's too late for investors to jump on this excellent business, but I will, of course, be providing more information as we'll hear more from the company during their conference call, and there'll be more information coming out from Wall Street analysts over the coming days. And of course, I'll incorporate all of that into my estimates for Snowflake moving forward.

[00:09:03]Again, congratulations to those of you.

[00:09:05]This was a huge one-day gain for this business, and congrats on those gains for all of you.