Snowflake Inc – Growth from Rising Coding and AI Agent Activities October 9, 2026

Brief Overview

Phillip Securities Research highlights that rising enterprise data volumes and AI adoption are accelerating cloud-native platform adoption, with the global data lake market projected to reach US$45.8 billion by 2030. AI products contributed roughly half of 2Q27 growth acceleration, with CoCo and CoWork surpassing 9,100 and 5,800 adopted accounts respectively, helping drive 37% YoY product revenue growth. The firm initiates coverage with a BUY recommendation and DCF-based target price of US$423.

Investment Positives

The investment case for Snowflake is anchored on several compelling growth drivers. Rising enterprise data volumes and AI adoption are accelerating the shift from on-premises infrastructure to cloud-native data platforms. Enterprises increasingly require scalable, cost-efficient storage and compute capabilities to manage growing datasets and support AI workloads, driving demand for modern data architectures. IBM estimates the global data lake market will reach US$45.8 billion by 2030, representing a 23.9% CAGR from 2024, supporting a sizeable long-term growth opportunity for Snowflake.

AI products are proving to be a significant catalyst, contributing roughly half of growth acceleration in 2Q27. This was driven by the rising adoption of CoCo and CoWork, with over 9,100 and 5,800 adopted accounts respectively. Expanding AI coding, agent, and application development workloads helped drive 37% YoY product revenue growth to US$1.5 billion in 2Q27 and contributed to Snowflake’s strongest revenue growth in three years.

The consumption-based model provides significant leverage to AI adoption. With 95% of revenue being consumption-based, usage is directly linked to revenue. Growing analytics and AI workloads drive higher compute usage, with AI being far more compute-intensive than traditional analytics. Growth is driven by both new customers and higher consumption from existing customers. Customers purchase credits upfront and consume them as workloads run, whilst higher-value products drive greater usage, credit consumption, and spending.

Challenges

The report does not explicitly outline specific investment challenges or risks facing Snowflake.

Outlook

The analyst forecasts strong growth momentum, projecting product revenue to grow 36% YoY to US$6.08 billion in FY27e, with adjusted EPS rising 63% YoY and an adjusted FCF margin of 23.8%. The consumption-based revenue model directly links AI-driven compute usage to revenue growth as customers consume more credits and increase spending on higher-value workloads.

Recommendation & Target Price

Phillip Securities Research initiates coverage with a BUY recommendation and a DCF-based target price of US$423, based on a 5.7% WACC and 5.1% terminal growth rate.

Frequently Asked Questions

Q: What is driving the growth in Snowflake's addressable market?

A: Rising enterprise data volumes and AI adoption accelerate cloud-native platform adoption. IBM estimates that the global data lake market will reach US$45.8 billion by 2030, representing a 23.9% CAGR from 2024.

Q: How significant was the contribution of AI products to recent growth?

A: AI products contributed roughly half of growth acceleration in 2Q27, helping drive 37% YoY product revenue growth to US$1.5 billion and Snowflake's strongest revenue growth in three years.

Q: What are CoCo and CoWork, and how are they performing?

A: CoCo and CoWork are AI products that have achieved strong adoption, with over 9,100 and 5,800 adopted accounts respectively, driving the recent growth acceleration.

Q: How does Snowflake's consumption-based model benefit from AI adoption?

A: With 95% of revenue being consumption-based, AI workloads directly drive revenue growth as AI is far more compute-intensive than traditional analytics, leading to higher credit consumption and spending.

Q: What are the financial forecasts for Snowflake?

A: The analyst forecasts product revenue to grow 36% YoY to US$6.08 billion in FY27e, with adjusted EPS rising 63% YoY and an adjusted FCF margin of 23.8%.

Q: What is Phillip Securities Research's investment recommendation?

A: The firm initiates coverage with a BUY recommendation and a DCF-based target price of US$423, based on a 5.7% WACC and 5.1% terminal growth rate.

Q: How does Snowflake's revenue model work?

A: Customers purchase credits upfront and consume them as workloads run. Growth is driven by new customers and higher consumption from existing customers, with higher-value products driving greater usage and spending.

This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.

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