Snowflake Growth Accelerates on AI Coding Agent, but Re-Rating May Be Done

Snowflake (SNOW) reports fiscal second-quarter earnings September 2. The company enters the print with its best sequential growth in history, driven by an AI coding agent called Cortex Code, or CoCo. But the stock is up 48% year-to-date. The question for the quarter is not whether growth improved – that is already visible in the numbers – but whether another surprise is still possible.

For the first quarter of fiscal 2027, Snowflake posted product revenue of $1.33 billion, up 34% year-over-year. That was the strongest sequential dollar growth the company has ever reported. CEO Sridhar Ramaswamy called out Cortex Code and Snowflake Intelligence as central to what the company calls the Agentic Enterprise. Remaining performance obligations hit $9.21 billion, up 38% year-over-year.

Management raised its full-year product revenue outlook to $5.84 billion, representing 31% annual growth, up from the prior $5.66 billion. The revision signals that the long slowdown in Snowflake's top line may be reversing.

TD Cowen, Deutsche Bank, Truist, BofA, and UBS have all raised their price targets on the stock in recent weeks. TD Cowen went to $370 from $300 while maintaining a Buy rating. The firm highlighted two catalysts: CoCo, which it described as unleashing multiple new AI accelerants, and the Cortex AI gateway, a centralized control plane for managing enterprise AI agents and monitoring consumption costs. Together, the two products let Snowflake push deeper into AI operations and security.

Hedge fund positioning tells a mixed story. In the first quarter of 2026, 80 funds held SNOW stakes, down from 90 in the prior quarter, according to Insider Monkey's database. Second-quarter filings, however, show substantial buying by several major funds. Point72 Asset Management boosted its position by roughly 2,449% to 2.81 million shares worth $716.1 million.

The stock is up 48% year-to-date, meaning the re-rating has already happened before the analyst targets caught up. Good news tends to move a stock only when the market did not expect it. Snowflake now leaves little room for disappointment. The quarter needs to be great, not just good, for further upside.

TD Cowen expects upward pressure on valuation, but the easy gains are likely behind. The bull case is credible – the AI products are real, growth is accelerating – but the stock now demands another surprise, not confirmation of the trend everyone is already pricing in.

Snowflake carries an Alpha Score of 49/100, a Mixed label in the Technology sector.