Snowflake beats estimates on AI demand, lifts software stocks

Snowflake's optimistic AI forecast is fueling a broader software rally, with several enterprise stocks rising alongside it and Jim Cramer indicating further upside potential.

This latest increase adds to a series of earnings reports this season where AI-related spending has consistently rewarded shareholders, even as some investors express doubts about how long high-priced software stocks can sustain their gains.

AI Fuels Snowflake's Growth

On Thursday, Snowflake shares surged 23% after the cloud data company raised its fiscal 2027 product revenue outlook to $6.07 billion from $5.84 billion, and reported a 37% year-over-year increase in second-quarter product revenue.

CEO Sridhar Ramaswamy said artificial intelligence tools are now propelling growth across Snowflake's main platform, not just its standalone AI products, calling it a compounding "flywheel effect" for the company.

The stock reached its highest point since December 2021, adding roughly $25 billion in market value during the move. Year to date, Snowflake has gained 39%, more than three times the S&P 500's 12% return over the same period.

Software Stocks Rally Together

The rally spread to other software companies. ServiceNow, Salesforce's record earnings run, Atlassian, Adobe, and Intuit all rose between 3.5% and 6%, while the iShares Expanded Tech-Software Sector ETF gained 3%.

Morgan Stanley analysts noted that the pattern of accelerating growth in recent quarters indicates AI is significantly driving usage of Snowflake's own platform, beyond its dedicated AI tools.

At least 34 brokerages raised their price targets after the results, based on LSEG data, with Wells Fargo issuing a Street-high target of $525. Snowflake now trades at nearly 15 times forward revenue, well above the software-sector ETF's 7.4 times multiple. Its forward earnings multiple of 121.8 times surpasses Datadog's 72.7 times and MongoDB's 52.1 times.

Following the report, CNBC's Jim Cramer flagged a huge move still ahead for Snowflake, calling it the cleanest way for cautious enterprises to buy AI compute on demand.

So Snowflake remains the best way for the uncertain to get compute but Broadcom tells a story of an explosion of business coming. Snowflake will have a huge move…

— Cramer

So Snowflake remains the best way for the uncertain to get compute but Broadcom tells a story of an explosion of business coming. Snowflake will have a huge move…. Broadcom? More nuanced…

— Jim Cramer (@jimcramer) September 3, 2026

The reaction mirrors a pattern seen elsewhere this earnings season, including Salesforce's own AI-driven breakout and software stocks rebounding after months of AI-replacement fears.

Whether this momentum continues may depend on how quickly Snowflake and its peers can convert rising AI demand into sustained profit margins, rather than just top-line growth.