Snowflake’s Snowballing Business and Robust Stock Price Outlook
Snowflake’s (NYSE: SNOW) Q2 results highlight the global shift to AI.
Now that the infrastructure build is well underway, sectors, industries, and businesses are embracing the application of AI, which requires data services that Snowflake is happy to provide.
Its data lake-based services span the data lifecycle, enabling the storage, management, analysis, and sharing of data across cloud environments.
Cross-cloud operability is critical to Snowflake’s appeal and utility for AI, making it a go-to source for many large businesses and a crucial component of global AI infrastructure.
Snowflake’s Accelerating Business Leads to Beat-and-Raise Quarter
Snowflake had a robust quarter, accelerating its growth compared to the same period last year and the prior quarter. The $1.14 billion net revenue is up 31.2% year over year, outpacing consensus estimates by more than 400 basis points due to strength in client counts and penetration.
Product revenue grew by 32%, a significant increase given that it accounts for nearly 100% of the revenue. Large clients' revenue was up by 30% and the net retention rate was 125%. RPO, a key business indicator, was also solid and up by 33%.
The margin news is also strong. Although there was some contraction in gross margin and GAAP results, the losses are primarily non-cash in nature. The adjusted results are more robust, including $0.35 in EPS, outperformance, and positive free cash flow.
The adjusted EPS is nearly double compared to the prior year, more than 3000 basis points ahead of consensus, with earnings expected to remain strong through the year’s end.
Snowflake’s Guidance Will Sustain the Bullish Trend in Analyst Sentiment
Snowflake’s guidance is another area of strength and one that is sustaining the uptrend in analysts' sentiment. The company raised its targets for revenue and earnings more than anticipated, catalyzing numerous price target increases. The revisions put the market in the high-end range, which tops out at $285, a nearly 20% upside from critical resistance levels, and higher highs are likely.
Other trends revealed by MarketBeat data include increased coverage and a firming sentiment, with the number of Sell and Holds declining and Buys and Strong Buys increasing. As of late August, this stock is rated a Moderate Buy.
Insider selling poses a risk to investors, but it is small and offset by robust institutional activity. While several insiders have been selling in 2025, the total number of shares sold is small, and insider holdings remain substantial, accounting for over 6% of the stock.
The bulk of sales is led by former CEO Frank Slootman, who is well-known for taking the business public. His sales are part of a previously disclosed plan and are being absorbed by the institutional community.
Institutional activity has underpinned Snowflake’s stock price action all year. The group was bullish in 2024 but ramped up the buying in 2025, netting more than $2 in shares for every $1 sold.
They provide solid support for this market, owning more than 65% of the shares, as reflected in the stock price action, which has been trending sideways within an extensive range for the last few years.
Snowflake Poised for New Highs in 2025
Following the release, Snowflakes' price action was very bullish, rising by more than 12% to show support in the low $190 range. This level aligns with the 30- and 150-day EMAs and is a strong support level unlikely to be broken soon.
The likely scenario is that Snowflakes' price action will continue to move higher and retest the top of the range by the end of calendar Q3 2025. A move to new highs is likely because of the results, guidance, and analyst trends. The late-August consensus of $240 is sufficient to set a three-year high, and it is expected to continue trending higher as the quarter progresses.
