Snowflake Inc. (SNOW) is gearing up for what could be a strong third quarter, and analysts are taking notice. The company has positioned itself squarely at the intersection of two massive trends: the migration of enterprise data to the cloud and the explosion of AI applications that need somewhere to live.

Rosenblatt analyst Blair Abernethy maintained Snowflake with a Buy rating and bumped his price target from $250 to $275. He's expecting the company to deliver an in-line or better fiscal third-quarter performance when earnings drop after the close on Dec. 3.

What's driving the optimism? Abernethy tweaked his product revenue growth estimate upward after digesting cloud service provider performance in the September quarter, feedback from regional customer events, and momentum in cloud data migration. He's now modeling 27% year-over-year organic product revenue growth in the third quarter. That's a step down from 32% in the second quarter as the business scales, but it's still impressive growth backed by increasing adoption of new products and accelerating AI-driven consumption.

The real story here is enterprises building AI and Agentic AI applications directly on Snowflake's data platform. More than 4,000 customers were using the company's AI and machine learning technology weekly in the second quarter, and Snowflake keeps expanding its embedded AI capabilities at a rapid clip.

For the third quarter specifically, Abernethy expects product revenue of $1.143 billion, which sits above both guidance and consensus. Total revenue should hit $1.192 billion, up 27% year over year. He's forecasting an adjusted operating margin of 9%, matching guidance, and EPS of 32 cents, slightly ahead of consensus.

The analyst also projects net revenue retention above 124%, supported by customers increasing usage and renewing at higher value as they mature on the platform. Remaining performance obligations grew roughly 33% year over year in the second quarter to $6.93 billion, driven by large enterprises signing longer-term deals that provide better visibility into fiscal 2026.

Here's where things get interesting: Snowflake recently acquired Datometry, and Abernethy sees this as a catalyst for faster migration of workloads from legacy data warehouses like Teradata. The technology will be integrated into Snowflake's AI-driven migration tools, enabling transitions that are up to four times faster and as much as 90% cheaper. That's the kind of value proposition that gets CFOs to sign checks.

There's also a new partnership with Palantir Technologies Inc. (PLTR) that allows customers to run bidirectional, zero-copy data flows. This strengthens Snowflake's federal market positioning, which could open up a whole new revenue stream.

Abernethy is keeping tabs on the adoption of newer products like Iceberg Tables, Native Apps, Snowpark Containers, and Streamlit. Management believes these can help accelerate growth in the second half. He's also watching early traction for Cortex AI and consumption trends among the largest customers in key verticals, including banking and media.

Despite broader macro uncertainty, the analyst remains confident that the secular shift of data workloads to the cloud will continue. He views Snowflake as strongly positioned to capture the next phase of AI-driven enterprise growth.

Snowflake shares were up 0.52% at $252.54 at the time of publication on Monday.