Snowflake is the IBD Stock Of The Day as the enterprise software maker capitalizes on the rise of artificial intelligence and a key AI customer. Snowflake stock has gained 49% in 2025, outperforming most software peers.
The company sells data analytics software that runs on cloud-computing platforms such as Amazon Web Services, part of Amazon.com. Also, Snowflake has evolved into a cloud data-management software provider.
Snowflake, privately held Databricks and Palantir Technologies are focused on helping companies modernize their proprietary data to customize artificial intelligence applications. Industry-specific versions of generative AI are expected to use company data to train AI models. Many companies are in trials with autonomous, goal-driven "AI agents."
On the stock market today, Snowflake stock rose 4.3% to close at 240.54. On a technical chart, Snowflake is forming a flat base. There's an early entry point at 231.94, the Sept. 19 high.
OpenAI Largest AI Customer
Also, Snowflake trades above both its 21-day exponential and 50-day moving averages.
Snowflake's customers include OpenAI, the leader in developing AI models and the owner of ChatGPT. OpenAI hosts an event for software developers on Monday.
"OpenAI's DevDay on Oct. 6 will be closely-watched, a venue to disclose new products," said UBS analyst Karl Keirstead in a report.
Also, Snowflake has a growing list of AI startups using its data management software. OpenAI and the AI startups account for 1% of Snowflake's overall revenue — and that figure is increasing fast, said Citi analyst Tyler Radke in a report.
"OpenAI is a customer using the (Snowflake) platform for core analytics and engineering," Radke said. "Specifically, OpenAI is their largest customer in the AI bucket and usage is growing nicely quarter-over-quarter."
Still, the OpenAI-Snowflake relationship isn't exclusive.
In September, Databricks and OpenAI signed a multiyear, $100 million deal to sell artificial intelligence services to large business customers. OpenAI's models, including GPT-5, its latest flagship model, will be directly available to businesses that store and analyze their corporate data in Databricks' platform, allowing them to build AI agents on top of it. It's not clear if OpenAI is using Databricks' platform internally.
'Snowflake Intelligence' A Game-Changer?
Snowflake stock surged in late August after the software maker reported second-quarter earnings and revenue that handily beat Wall Street targets. The emerging flat base started forming after the earnings gap-up.
Revenue climbed 32% to $1.1 billion, the enterprise software maker said, vs. consensus estimates of $1.09 billion.
For the October quarter, Snowflake forecast product revenue in a range of $1.125 billion to $1.130 billion vs. consensus estimates of $1.12 billion.
In early 2024 Snowflake brought in Sridhar Ramaswamy as its new chief executive officer. Ramaswamy had been a Snowflake senior vice president after it acquired AI startup Neeva, which Ramaswamy founded. Earlier, Ramaswamy ran Google-parent Alphabet's digital advertising business.
The software maker is readying a new product called "Snowflake Intelligence," said Morgan Stanley analyst Sanjit Singh in a report.
"Snowflake Intelligence (currently in public preview) is an agentic powered solution that allows users to engage in natural language conversations with all of their data (both structured or unstructured)," Singh said. "CEO Ramaswamy called Snowflake Intelligence the most important thing that Snowflake is doing as a company today. The key opportunity behind Snowflake Intelligence is that it directly exposes Snowflake to a much wider audience whereas historically Snowflake was hidden behind dashboards and business intelligence tools like (Salesforce's) Tableau."
Snowflake customers can share data with their partners across multiple online storage systems using the company's data warehouse. In addition, the company enables applications to easily share searchable data.
Databricks A Strong Rival
Snowflake faces stiff competition from fast-growing Databricks, analysts say. Both companies have been on acquisition sprees.
Meanwhile, Snowflake stock has outperformed software peers such as Salesforce and ServiceNow.
The iShares Expanded Tech-Software Sector ETF — an industry index that includes many big-cap software companies, such as Microsoft — has advanced 15% this year.
Some big-cap software companies have underperformed in 2025 because there's growing investor angst over the "per seat" licensing business models of some software companies if artificial intelligence improves productivity but results in the elimination of jobs. That potentially means less per-seat software licenses.
However, Snowflake has a consumption-based business model and doesn't rely on subscriptions. Snowflake charges clients based on how much software they use.
Open-Source Iceberg A Problem?
On the other hand, open-source data storage technologies such as Apache Iceberg could present a problem for Snowflake, Databricks and similar companies, some analysts say.
Snowflake and other software companies store customer data in proprietary platforms. It's difficult for customers to switch software firms. Iceberg enables organizations to store their data in open, standardized formats.
Founded in 2012, Snowflake pulled off the largest initial public offering ever by a software company in September 2020, raising $3.4 billion. But Snowflake stock swooned in 2022 as analysts questioned its lofty valuation amid decelerating revenue growth.
Snowflake Stock Technical Ratings
Meanwhile, SNOW stock holds an IBD Composite Rating of 89, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Snowflake stock has an Accumulation/Distribution Rating of C-. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
