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My recent piece on Snowflake has made me redefine the company’s investment thesis. Below are the best five investment narratives for the stock.

Snowflake Is Becoming the Core Platform for Enterprise AI

Snowflake has come a long way from being just a cloud data platform—it’s steadily evolving into something much bigger: the engine that powers enterprise AI. The company is now positioning itself as a horizontal AI operating system, giving businesses the tools they need to build and run smart, data-driven applications, without compromising on security or scalability. With the introduction of Cortex AI, Cortex Agents, and connections to top AI models from OpenAI, Anthropic, Meta, and DeepSeek, Snowflake is carving out a central role in how enterprises adopt generative AI.

Already, more than 4,000 customers are using Snowflake’s AI and machine learning capabilities every week. And it’s not just for analytics anymore—companies are creating chatbots, automating tasks, and developing industry-specific AI agents. A recent partnership with Microsoft integrates Cortex Agents directly into Microsoft Copilot and Teams, giving Snowflake a much larger footprint.

At the same time, Snowflake Edge ensures sensitive enterprise data used in these AI tools stays safe and compliant. The company’s also branching out into multi-modal AI, including document, image, and video analysis—vital for sectors like healthcare, law, and advertising. If Snowflake can become the go-to AI and data engine for the enterprise world, it opens up a huge market opportunity, driven by complex, high-value workloads.

Iceberg Was Once a Threat—Now It’s Fueling Snowflake’s Growth

There was a time when people thought Apache Iceberg might hurt Snowflake’s business, especially its storage revenue. The concern was that supporting open data formats could eat into their proprietary model. But that hasn’t happened. Instead, Iceberg has turned into an unexpected growth lever. It’s now giving Snowflake access to new types of workloads it couldn’t handle before—especially in data lakes and hybrid environments.

According to the company, Iceberg is already contributing real revenue. Storage still makes up about 11% of total income, and rather than replacing Snowflake-native storage, Iceberg is helping customers tap into massive new datasets. This flexibility—letting businesses run analytics on various formats and in different environments—has made Snowflake even more appealing, particularly for regulated industries or those spread across multiple clouds. What looked risky at first has actually made Snowflake stronger, extending its reach and reinforcing its position in the market.

New Products Like Snowpark and Unistore Are Powering Revenue Growth

Snowflake isn’t just growing—it’s evolving. What started as a data platform has become a full-blown suite of tools covering everything from analytics and data engineering to collaboration, applications, and AI. This shift to a multi-product platform is already paying off, with fresh revenue momentum building, especially in the latter half of FY26. In FY25, Snowflake’s product revenue reached $3.5 billion, marking a 30% year-over-year increase.

They’re expecting that number to grow another 24% to $4.28 billion in FY26, with acceleration picking up in the second half of the year. One reason? More customers are embracing new products. Snowpark alone now makes up about 3% of revenue and continues to scale. Other additions—Dynamic Tables, Unistore, and the Native Application Framework—are driving heavy, repeat usage. These tools are becoming part of how businesses operate day-to-day.

The number of customers spending over $1 million annually jumped from 455 to 580, which shows how effective Snowflake has been at expanding within its existing customer base. As more companies depend on Snowflake’s growing product suite, revenue becomes more predictable, and margins get a lift from higher-value consumption.

Snowflake’s Competitive Edge Keeps Growing Thanks to Scale and Ecosystem

What sets Snowflake apart is the entire ecosystem and the flexibility of its cloud-agnostic model. As more companies move toward unified data strategies, Snowflake’s unique architecture gives it a serious leg up. The ability to work across different cloud providers, combined with a deepening network of partners, makes switching away from Snowflake tough.

By early 2025, Snowflake had grown its customer base to 11,159, up from 9,384 a year before. Large enterprises now make up 42% of its revenue, including many from the Forbes Global 2000 list. A big chunk of Snowflake’s major clients are also collaborating more, regularly sharing data across teams and with partners.

For example, key accounts like Stripe and Braze have over 160 active data-sharing links. And thanks to the Datavolo acquisition, Snowflake now integrates even more tightly with everyday tools like SharePoint, Google Drive, Slack, and Workday—making it even harder for companies to leave. These network effects make the platform more valuable the more it’s used, leading to stronger customer retention (currently at 126% net revenue retention) and higher barriers for competitors.

Snowflake Balances Growth and Profit With Strong Free Cash Flow

Even with all this growth and product expansion, Snowflake isn’t losing sight of financial discipline. The company has managed to generate over $1 billion in free cash flow while continuing to invest for the future. In Q4 FY25, Snowflake brought in $943 million in product revenue—a 28% jump from the previous year—with a 43% free cash flow margin for the quarter and 26% for the full year.

Looking ahead to FY26, they’re aiming for a 25% free cash flow margin and an 8% operating margin, all while tightening stock-based compensation down to 37% of revenue. The company still has $2 billion left on its stock buyback plan, which runs through 2027, and a healthy $5.3 billion in cash on the books. Snowflake now belongs to an elite group of companies that can grow fast and stay profitable—a combination that often leads to higher valuations and long-term value for shareholders.

TL;DR: Wrapping it

To sum it up, the company now has AI native to the platform with no need to get data outside the security perimeter. It is now tapping into open data formats, allowing it to open itself to new workloads. New applications are emerging within the ecosystem. And they are doing it while being cash-flow positive.

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