What Snowflake Bulls Got Right

Snowflake’s five year, US$6b collaboration with AWS on agentic AI put a single, eye catching contract at the center of every recent headline, yet that agreement only arrived after a bruising stretch of volatility. Holding Snowflake from the start of the year would have returned 41.2%, including dividends. If you were deciding on 1 January 2026, how confident could you really be that AI adoption and cloud migration would justify paying up for that ride?

The move put Snowflake in the middle of this trade. Scan 54 AI infrastructure stocks for other companies exposed to it.

The Two Stories Snowflake Investors Had To Weigh

Snowflake shares cost US$219 at the start of the period, which meant every investor had to decide how much future AI and cloud optimism to build into that price.

The bullish story argued that enterprise AI spending and cloud migrations would sustain strong demand, pointing to a Fair Value of US$263, which was a rough guide to what that growth view implied. That case leaned on assumptions such as revenue rising 24.0% a year and profit margin reaching 7.0% within three years.

The bearish view still saw expansion but worried about AI native rivals and tougher regulation, producing a Fair Value of US$187. Under that narrative, investors had to consider risks like customers shifting to bundled hyperscaler solutions and the business trading on a future P/E of 155.8x to justify its earnings assumptions.

What The Results Changed For The Snowflake Debate

Snowflake’s biggest proof point was the Q2 2027 print, where revenue reached US$1.55b against US$1.14b a year earlier while the loss narrowed from US$298.0m to US$191.7m and net margin improved from -26.0% to -12.4%. That pace, along with stronger AI product uptake and the US$6b AWS collaboration, lined up more cleanly with the optimistic growth narrative, although profitability targets in that bull case still were not met.

The useful takeaway is simple. When a thesis leans on margin expansion and AI driven demand, you pressure test it against reported net margin and the share of revenue tied to AI products, not just headline growth or guidance upgrades.

What Snowflake’s Price Is Asking You To Believe Now

Snowflake now trades at US$306, after a 41.2% gain from the start of the year. The selected Narrative’s Fair Value sits below that level, reflecting a view that the current quote already incorporates ambitious expectations on AI and cloud data usage.

The Narrative focuses on Anthropic’s Claude integration, AI features, and large contracts such as the AWS deal, set against pressure from Databricks. A buyer at US$306 is effectively assuming Snowflake converts its AI tools into durable, high value customer spend. This raises the question of how rising competition in data and AI analytics affects that thesis.

"Snowflake represents a bet on two major trends: the continued migration of data to the cloud and the integration of AI into business operations. The company has established a strong position in cloud data warehousing and is making strategic moves to capture AI-driven growth."

The price and this Narrative do not agree. → Uncover what this Narrative says Snowflake is actually worth

Before The Next Story Makes Headlines

You may be late to this rally, but that does not have to mean arriving late to every opportunity. Start with companies whose prices leave room for a different view of their future. Here are three trading below our estimates.

• Company 1 - 34% below our estimate - converts long term optical and solar contracts into higher margin manufacturing programs.
• Company 2 - 48% below our estimate - turns a record backlog of complex construction projects into stronger utilization and earnings.
• Company 3 - 21% below our estimate - fills expanded production capacity with AI data center optics and photonics packaging work.

That is three of the list. See the full list of 29 companies trading below our fair value estimates →

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com