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Artificial intelligence (AI) software demand is increasing at a healthy clip, which isn’t surprising considering the productivity gains this technology can deliver.
A recent survey by McKinsey revealed that 80% of respondents who use AI report higher productivity, while 50% report better decision-making. Not surprisingly, the generative AI tools offered by Palantir Technologies (NASDAQ:PLTR) are in high demand, as evidenced by the company’s phenomenal growth.
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Palantir is one of the pioneers in AI software. The productivity gains delivered by its Artificial Intelligence Platform (AIP) are driving solid revenue and earnings growth for Palantir by helping it land bigger deals and more customers. However, Palantir stock is expensively valued, and that’s one of the reasons it has lost over 4% of its value in 2026.
But the same isn’t true for Snowflake (NYSE:SNOW), another AI software company whose stock price has jumped 53% this year. Let’s see why that has been the case and check whether it is too late to buy this AI software specialist.
AI tools are powering Snowflake’s growth
Snowflake is a data cloud platform provider that enables customers to store, share, and analyze data in a secure environment. However, the company has been helping its customers do more with their data by integrating AI tools across its data cloud platform.
For instance, Snowflake customers are now using its AI products to build and deploy AI agents, write code, and boost employee productivity through personalized agents. Even better, Snowflake’s AI tools are helping it attract more customers. It added 692 net new customers in the second quarter of fiscal 2027 (which ended July 31), a 32% increase over the prior year. The company finished fiscal Q2 with just over 14,500 customers.
A large share of these customers use Snowflake’s AI products. For instance, the CoWork personal agent tool is now being used by 5,800 customer accounts. Meanwhile, the Snowflake CoCo AI coding agent is now being used by more than 9,100 customer accounts. The company notes that more than 2,000 accounts started using CoCo in the previous quarter.
The strong adoption of Snowflake’s AI offerings explains why the company posted 35% year-over-year revenue growth last quarter to $1.55 billion. Importantly, Snowflake’s earnings per share grew at a much faster pace of 77% year over year to $0.62, easily beating the consensus estimate of $0.45. The stronger growth in Snowflake’s earnings isn’t surprising, as existing customers are spending more money on its services.
