Snowflake Inc. (SNOW): A Bull Case Theory

We came across a bullish thesis on Snowflake Inc. (SNOW) on Compounding Your Wealth’s Substack. In this article, we will summarize the bulls’ thesis on SNOW. Snowflake Inc. (SNOW)’s share was trading at $203.18 as of 22nd May. SNOW’s forward P/E was 181.82 according to Yahoo Finance.

Why Snowflake Inc. (SNOW) Soared Today

A software engineer at work, surrounded by a wall of computer monitors connected to a ‘Data Cloud’ platform.

Snowflake reported strong Q1 FY26 results, with product revenue up 26% YoY to $997 million (28% normalized growth). Remaining Performance Obligations (RPO) rose 34% to $6.7 billion, signaling strong demand, though Net Revenue Retention (NRR) declined to 124%, reflecting more efficient enterprise spending. Operating margin improved to 9%, up 442 basis points YoY, and free cash flow margin reached 20%, with FY26 guidance at 25%, expecting second-half strength.

Cortex AI is now embedded in enterprise workflows with 5,200+ weekly active accounts, powering use cases at Kraft Heinz, Samsung Ads, and others. It supports multi-model integration with Meta’s Llama and OpenAI, monetized indirectly via platform usage. Snowflake’s native Apache Iceberg support enhances open architecture for hybrid and multi-engine environments, expanding workload diversity.

Snowpark and Dynamic Tables exceeded expectations, enabling unstructured data processing and real-time analytics, adopted by clients like Hilton and Disney. The Snowflake Marketplace grew, supporting secure data sharing and ecosystem collaboration. Connectors expanded to integrate with major SaaS platforms, driving efficiency for AstraZeneca and Dentsu. Snowflake launched Snowflake Public Sector Inc. with DoD IL5 certification, expanding into federal markets.

Despite competitive pressure from Microsoft Fabric, Snowflake emphasizes strong Azure partnerships. Customer growth remains solid with 451 net new customers (+19% YoY) and two $100M+ contracts in financial services. Full-year revenue guidance raised to $4.325 billion (+25%). Management focuses on margin expansion, disciplined share buybacks ($491M in Q1), and accelerating AI monetization. Overall, Snowflake’s robust growth, innovation, and expanding AI platform support a positive outlook amid evolving enterprise data needs.

We have previously covered The Cigna Group (CI) in April 2025 wherein we summarized a bull thesis by Oliver | MMMT Wealth on Substack. Oliver highlighted Snowflake (SNOW) as a leading SaaS investment, expecting over 20% revenue and EBITDA growth alongside a strong 126% net revenue retention rate. Despite increased R&D spending, the company showed margin improvement, supported by a solid balance sheet with no long-term debt and $5 billion in cash, reinforcing its long-term growth potential through continuous innovation and share repurchases. Since then, the stock has risen by 44.89%

Snowflake Inc. (SNOW) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 85 hedge fund portfolios held SNOW at the end of the fourth quarter which was 71 in the previous quarter. While we acknowledge the risk and potential of SNOW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SNOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.