Snowflake Inc. (NYSE: SNOW) experienced a significant uptick in its stock price on Wednesday, climbing 4.9% to close at $283.73 in late trading. The rally was fueled by an upgraded price target from Wells Fargo & Co. (NYSE: WFC), which raised its target to $500 from $320 while maintaining an Overweight rating. The stock briefly touched an intraday high of $293.57.
Analyst Ryan MacWilliams of Wells Fargo cited increased platform spending and data uploads driven by artificial intelligence agents as the primary catalysts for the upgrade. 'The game has changed,' MacWilliams wrote in a note to clients, emphasizing Snowflake's position as a short-term AI winner that does not require the heavy capital expenditures typical of AI infrastructure investments. Instead, Snowflake's consumption-based billing model means it benefits directly from customer usage.
The new price target of $500 is just 5.8% below the $531 per share threshold set in Chief Executive Sridhar Ramaswamy's compensation package. To trigger the award, Snowflake must achieve that stock price by July 15, 2033. At the current share count, the $500 target implies an equity value of roughly $172.5 billion, which is 6.3% below the award's market-value threshold of $184 billion.
Wednesday's rally outpaced the broader software sector. The iShares Expanded Tech-Software Sector ETF (NYSEARCA: IGV) gained about 0.6%, while the Invesco QQQ Trust (NASDAQ: QQQ) slipped 1.6%. Snowflake outperformed both by 4.4 and 6.6 percentage points, respectively.
The upgrade came shortly after Snowflake launched its Cortex AI Gateway on Tuesday. The new product manages internal and third-party AI agents and is compatible with over 100 Model Context Protocol servers. It also logs all activities and monitors token expenses. 'Security has to be at the center of that shift,' said Snowflake security chief Mayank Upadhyay. The gateway is expected to enter public preview soon, though a general availability date has not been announced.
Snowflake's recent earnings report showed accelerating usage ahead of the product launch. First-quarter product revenue rose 34% to $1.33 billion, while remaining performance obligations increased 38% to $9.21 billion. Net revenue retention stood at 126%. More than 13,600 accounts accessed Snowflake's AI tools, and Cortex Code was adopted by over 7,100 accounts. However, the company did not disclose a separate figure for AI-derived revenue.
Management guided for second-quarter product revenue in the range of $1.415 billion to $1.420 billion, representing growth of about 30%. The full-year outlook remains at $5.84 billion, a 31% increase. Based on Wells Fargo's target, the equity-value-to-guided-product-revenue ratio is approximately 29.5 times, indicating the extent of anticipated future AI monetization built into the target.
Despite the optimism, risks remain. The Cortex AI Gateway is still in pre-release, and AI revenue figures are not yet separately disclosed. Snowflake's consumption-based model gives customers flexibility, but if consumption growth slows, the $500 valuation may prove overly optimistic. The key test will be whether a higher number of AI accounts translates into sustained, accelerated consumption growth.
