Snowflake Inc (NYSE:SNOW) shares jumped more than 20% on Thursday following a blowout second-quarter earnings report, driven by accelerating product revenue growth and surging enterprise adoption of its AI offerings.
Bank of America raised its price objective on the stock to $470 from $395, citing accelerating product revenue growth and reiterating a Buy rating.
Snowflake's product revenue growth accelerated to 37% year-over-year in the second quarter of fiscal 2027, up from 34% in the first quarter, according to BofA. The company's guidance for the third quarter calls for product revenue growth of 37-38%, implying further acceleration.
BofA said newer customer cohorts are ramping toward purchased capacity faster than prior cohorts, with recent cohorts reaching 80% of purchased consumption materially sooner.
The bank pointed to faster deployments, AI-enabled migrations, and growing adoption of Snowflake's CoCo and CoWork offerings as drivers of the stronger trends.
Current remaining performance obligations grew 42% year-over-year, marking the fourth consecutive quarter of accelerating cRPO growth, BofA said. The company also added 48 net new customers with trailing 12-month spend surpassing $1 million.
BofA said AI adoption is contributing meaningfully to the growth acceleration, though the company has not quantified the consumption uplift from AI adopters specifically. The bank said a key debate going forward is whether AI is driving higher customer lifetime value or simply pulling forward existing workloads.
BofA's new price objective is based on 22.4 times enterprise value to estimated calendar year 2027 revenue, up from 19.4 times previously, a premium to infrastructure software peers that the bank said is warranted given Snowflake's accelerating growth, execution, and expanding AI-driven consumption. The new target implies 54% potential upside, according to the bank.