Cortex AI Momentum Fuels Potential Upside for SNOW Stock
Snowflake's SNOW Cortex AI platform is experiencing increased enterprise adoption, emerging as a significant driver of its consumption-led revenue model. In the second quarter of fiscal 2026, over 6,100 accounts utilized Snowflake's AI features weekly, marking a 17% sequential increase. AI deployments accounted for 50% of new customer additions, with 25% of all deployed use cases incorporating AI, indicating expanding usage across business functions. Cortex AI's capabilities are being enhanced through offerings like Cortex AI SQL and integrations with advanced models such as GPT-5, facilitating additional revenue generation within Snowflake's consumption-based model. Enterprises like Thomson Reuters and BlackRock have adopted Cortex AI to support AI-powered agents and enhance client service, demonstrating the platform's ability to deliver value at scale. Snowflake Intelligence is also being used to extend natural language access to enterprise data, making AI more accessible to non-technical users.
This AI-driven momentum is increasingly reflected in SNOW's recently reported performance. In the second quarter of fiscal 2026, product revenues rose 31.5% year over year to $1.09 billion, supported by a healthy net revenue retention rate of 125%. Remaining Performance Obligations stood at $6.9 billion, up 33% from the year-ago period, while the count of customers spending over $1 million annually reached 654. The Zacks Consensus Estimate for third-quarter product revenue is pegged at $1.12 billion, up 24% from the prior-year figure. The consensus mark for RPOs is pegged at $7.33 billion, up 29% year over year. As Cortex AI adoption deepens and generative AI workloads scale, Snowflake appears well-positioned for further upside.
Snowflake's push into enterprise AI through Cortex AI is drawing competitive pressure from ServiceNow NOW and Salesforce CRM. ServiceNow is expanding AI across enterprise workflows, targeting automation and decision support in structured business environments. Its platform-centric model offers an alternative to Snowflake's data-first approach. Salesforce is scaling AI across analytics and customer operations, emphasizing usability and integration. As Cortex AI adoption grows, both ServiceNow and Salesforce are intensifying their AI focus, posing increasing challenges to Snowflake in the race to power enterprise-wide AI transformation.
Snowflake shares have appreciated 56.1% year to date, outperforming the broader Zacks Computer & Technology sector’s return of 13.4% and the Zacks Internet Software industry’s increase of 18.8%.
Snowflake stock is trading at a premium, with a forward 12-month Price/Sales of 15.79X compared with the industry’s 5.65X. SNOW has a Value score of F.
The Zacks Consensus Estimate for SNOW’s third-quarter fiscal 2026 earnings is pegged at 28 cents per share, unchanged over the past 30 days. The figure indicates a 40% increase year over year.
Snowflake currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.