Snowflake (SNOW) reported strong fiscal Q1 results and raised its fiscal 2027 guidance, driven by an AI-led inflection, RBC Capital Markets said.
The analysts said fiscal 2027 product revenue growth guidance was raised to 31% from 27%, with further upside to estimates likely. Management highlighted a step-change in the business as AI builds on its core data platform and creates additional value layers, with net revenue retention improving to 126% from 125% last quarter.
AI is boosting the core platform by making customer data more valuable and easier to use, while also driving adoption of products such as Snowflake Intelligence and Cortex Code, which already has over 7,100 customers. These AI tools are also increasing overall platform consumption by simplifying data workflows and product development is accelerating with more than 20% more features delivered year over year, supporting future growth, the analysts said.
"We believe 2026 will increasingly show stability and ultimately improvement in cloud spend, partially benefiting from increased AI workload," the analysts said in a note Wednesday, adding that this should benefit Snowflake.
RBC raised its price target on Snowflake to $284 from $220 while maintaining an outperform rating.
Shares of Snowflake rose more than 37% in Thursday afternoon trading.
Price: $240.30, Change: $+65.04, Percent Change: +37.11%