AI Is The Most Addictive Drug on Wall Street & Snowflake Just Became The Dealer (Shares Soar)

“I’m in the drug enterprise AI business”- Snowlfake

Snowflake just reminded Wall Street why AI is the most addictive drug in the market right now. Case in point: Snowflake went full scorched-Earth on the haters as revenue came in at $1.14 billion, up 32% from last year, and earnings landed at $0.35 a share against the Street’s $0.27. The result? Shares are ripping +17% today as this quarter's numbers are enough to erase every concern about whether enterprise software is already priced like gold-plated fentanyl.

(Source: Imgflip) 

Of course, it has to be said that the company has quietly been riding the same tailwinds as Nvidia and Microsoft without getting lumped into the Magnificent Seven bubble. Enterprises are drowning in data, and they need somewhere to dump it that doesn’t look like an IT department suicide note. And yet, that’s Snowflake’s entire “moat”: warehouse the chaos, rent it back to you on subscription, then bolt AI tools on top so you feel like you’re future-proofing instead of just paying protection money. And last quarter, it clearly worked.

(Source: Investopedia) 

What’s more is that net revenue retention held at 125%, and the million-dollar club swelled to 654 customers, up from 606 the quarter before. That’s 48 more companies signing up to shovel seven figures into Snowflake’s servers every year.

Additionally, guidance also mooned.  Management raised full-year product revenue expectations to $4.4 billion, good for 27% growth. That’s up from the 25% they promised in June… a small bump, but in this tape, a beat-and-raise is as good as oxygen. Investors rewarded it with some face-melting bullishness, whereas now, Snowflake is sitting at +110.68% gains over the last 12 months. 

(Source: Giphy) 

Now given all of this… what’s the catch here? Spoiler: It’s the valuation. Snowflake trades like it’s immune to gravity… between 13.0x to 17.04x forward sales, in a sector where double-digit multiples usually mean “bubble” in flashing red lights. The company has to keep posting quarters like this on repeat or it risks collapsing under its own expectations (See: Nvidia earnings for context). Which technically, isn’t a good thing considering that enterprise software isn’t sexy. It’s plumbing. The market just happens to be addicted to plumbing that can scale AI workloads without collapsing.

Of course, we’ll see if Snowflake can keep besting itself every quarter… but regardless, this was definitely one of Snowflake’s cleanest prints in years. No adjusted EBITDA clusterf*ks, no churn story… just straight-line growth and customers willing to pay more.

(Source: Giphy)

Meaning, at the end of the day, the bull case writes itself: data sprawl isn’t slowing, AI needs structured warehouses, and Snowflake is already embedded inside Fortune 500 budgets. The bear case is valuation math, and valuation math doesn’t matter until it suddenly does. Which means, for now, Wall Street will take the drug, and milk it for all it’s worth. Until next time, friends… 

At the time of publishing, Stocks.News holds positions in Microsoft as mentioned in the article.