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Should You Tap Snowflake's Post-Earnings Rally Via ETFs?
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Key Takeaways
Snowflake's strong AI adoption and raised outlook support continued growth.
Rich valuation raises downside risk if growth expectations weaken.
DUNK, CLOU and XDAT offer diversified exposure to SNOW's AI growth story.
In early September,Snowflake (SNOW - Free Report) reported second-quarter fiscal 2027 non-GAAP earnings of 62 cents per share, up 77.1% year over year andsurpassing the Zacks Consensus Estimate by 37.78%.
Revenues of $1.55 billion increased 35.1% and beat the consensus mark by 4.91%. Growth was driven by strength in the core data platform and a meaningful step-up in AI revenue.
SNOW’s fiscal second-quarter performance was helped by strong consumption of its core platform, with product revenues representing the majority of results. Product revenues rose 37% to $1.49 billion and accounted for 96% of total revenues in the fiscal second quarter.
Snowflake’s AI Products Broaden Platform Usage
Snowflake highlighted strong performance from its artificial intelligence (AI) coding agent, "CoCo," which now has 9,100 accounts, adding over 2,000 new accounts sequentially.
Management said AI products drove about half of the growth acceleration. Snowflake launched more than 330 product capabilities in the first half of fiscal 2027, with customer use cases up 89% year over year and core platform consumption increasing among CoCo users.
Snowflake Raises Fiscal 2027 Product Revenue Outlook
For the third quarter of fiscal 2027, Snowflake expects product revenues of $1.588 billion to $1.593 billion, implying 37% to 38% year-over-year growth and above the consensus estimate of $1.5 billion, as mentioned in CNBC TV18.
For fiscal 2027, product revenues are projected to be $6.07 billion, representing 36% growth, up from the prior guidance of $5.84 billion and 31% growth. Snowflake also raised its non-GAAP operating margin outlook to 14.5% from 13.5%, expects a 74% non-GAAP product gross margin and reiterated a 23% adjusted free cash flow margin.
Market Reaction
Snowflake shares have risen about 6.8% over the past five days, including a post-earnings surge followed by some profit-taking. The key question is what lies ahead for the stock. The stock currently has a Zacks Rank #2 (Buy).
Eight out of 12 analysts raised their earnings estimates over the past seven days for the upcoming quarter, while nine of 15 analysts did the same for the full fiscal year. The Zacks Consensus Estimate for the upcoming quarter rose from 53 cents to 59 cents over the past year.
Snowflake is benefiting from rising enterprise AI adoption and growing demand for cloud analytics. Its AI Data Cloud integrates enterprise data, AI models and workflows, helping the company compete with Dell Technologies (DELL) and Oracle (ORCL).
Inside Valuation
Snowflake shares have gained about 53% year to date, significantly outperforming the broader technology sector. However, SNOW trades at a premium forward 12-month Price/Sales multiple of 21.40X, versus 4.07X for the underlying Internet Software industry. SNOW trades at 154.18X forward earnings, compared with the industry’s 20.07X multiple.
The premium valuation implies that investors have high expectations for SNOW’s future growth, particularly from AI and cloud analytics. However, it also leaves the stock vulnerable to a pullback if growth slows or results fall short of expectations. The stock is a high-growth, high-momentum name but falls short on value.
Price Target
Based on short-term price targets offered by 43 analysts, the average price target for Snowflake Inc. comes to $405.58. The forecasts range from a low of $110.00 to a high of $525.00. The average price target represents an increase of 20.89% from the closing price of $335.50 recorded on Sept. 8, 2026.
Why ETFs Are Good Approach to Play the Stock
Since valuations are rich and the potential price gains look limited from the current level, investors may find it more prudent to play the stock’s AI growth story through a basket approach. Against this backdrop, below we highlight a few Snowflake-heavy exchange-traded funds (ETFs).
Dana Unconstrained Equity ETF (DUNK - Free Report) – SNOW has about 10.66% weight
Global X Cloud Computing ETF (CLOU - Free Report) – SNOW has about 7.31% weight
Franklin Exponential Data ETF (XDAT - Free Report) – SNOW has about 6.26% weight
TrueShares Technology, AI & Deep Learning ETF (LRNZ - Free Report) – SNOW has about 6.05% weight
View the Zacks #1 Rank List
Image: Bigstock
Should You Tap Snowflake's Post-Earnings Rally Via ETFs?
Key Takeaways
In early September,Snowflake (SNOW - Free Report) reported second-quarter fiscal 2027 non-GAAP earnings of 62 cents per share, up 77.1% year over year and surpassing the Zacks Consensus Estimate by 37.78%.
Revenues of $1.55 billion increased 35.1% and beat the consensus mark by 4.91%. Growth was driven by strength in the core data platform and a meaningful step-up in AI revenue.
SNOW’s fiscal second-quarter performance was helped by strong consumption of its core platform, with product revenues representing the majority of results. Product revenues rose 37% to $1.49 billion and accounted for 96% of total revenues in the fiscal second quarter.
Snowflake’s AI Products Broaden Platform Usage
Snowflake highlighted strong performance from its artificial intelligence (AI) coding agent, "CoCo," which now has 9,100 accounts, adding over 2,000 new accounts sequentially.
Management said AI products drove about half of the growth acceleration. Snowflake launched more than 330 product capabilities in the first half of fiscal 2027, with customer use cases up 89% year over year and core platform consumption increasing among CoCo users.
Snowflake Raises Fiscal 2027 Product Revenue Outlook
For the third quarter of fiscal 2027, Snowflake expects product revenues of $1.588 billion to $1.593 billion, implying 37% to 38% year-over-year growth and above the consensus estimate of $1.5 billion, as mentioned in CNBC TV18.
For fiscal 2027, product revenues are projected to be $6.07 billion, representing 36% growth, up from the prior guidance of $5.84 billion and 31% growth. Snowflake also raised its non-GAAP operating margin outlook to 14.5% from 13.5%, expects a 74% non-GAAP product gross margin and reiterated a 23% adjusted free cash flow margin.
Market Reaction
Snowflake shares have risen about 6.8% over the past five days, including a post-earnings surge followed by some profit-taking. The key question is what lies ahead for the stock. The stock currently has a Zacks Rank #2 (Buy).
Eight out of 12 analysts raised their earnings estimates over the past seven days for the upcoming quarter, while nine of 15 analysts did the same for the full fiscal year. The Zacks Consensus Estimate for the upcoming quarter rose from 53 cents to 59 cents over the past year.
Snowflake is benefiting from rising enterprise AI adoption and growing demand for cloud analytics. Its AI Data Cloud integrates enterprise data, AI models and workflows, helping the company compete with Dell Technologies (DELL) and Oracle (ORCL).
Inside Valuation
Snowflake shares have gained about 53% year to date, significantly outperforming the broader technology sector. However, SNOW trades at a premium forward 12-month Price/Sales multiple of 21.40X, versus 4.07X for the underlying Internet Software industry. SNOW trades at 154.18X forward earnings, compared with the industry’s 20.07X multiple.
The premium valuation implies that investors have high expectations for SNOW’s future growth, particularly from AI and cloud analytics. However, it also leaves the stock vulnerable to a pullback if growth slows or results fall short of expectations. The stock is a high-growth, high-momentum name but falls short on value.
Price Target
Based on short-term price targets offered by 43 analysts, the average price target for Snowflake Inc. comes to $405.58. The forecasts range from a low of $110.00 to a high of $525.00. The average price target represents an increase of 20.89% from the closing price of $335.50 recorded on Sept. 8, 2026.
Why ETFs Are Good Approach to Play the Stock
Since valuations are rich and the potential price gains look limited from the current level, investors may find it more prudent to play the stock’s AI growth story through a basket approach. Against this backdrop, below we highlight a few Snowflake-heavy exchange-traded funds (ETFs).
Dana Unconstrained Equity ETF (DUNK - Free Report) – SNOW has about 10.66% weight
Global X Cloud Computing ETF (CLOU - Free Report) – SNOW has about 7.31% weight
Franklin Exponential Data ETF (XDAT - Free Report) – SNOW has about 6.26% weight
TrueShares Technology, AI & Deep Learning ETF (LRNZ - Free Report) – SNOW has about 6.05% weight