Snowflake (SNOW) delivered a blockbuster, thesis-affirming Q1 as AI monetization moves to a higher gear, Morgan Stanley said in a Thursday note.

The report said the firm returned to over 3% beats with product revenue accelerating for a second straight quarter and coming in 5% ahead of consensus.

"Unlike the accel see in mid FY26, the driver of outperformance was stronger consumption fueled by AI capabilities and a strong core data platform business," the note said.

The report also pointed to its guidance showing an acceleration in product revenue growth to over 31% in fiscal 2027, from over 29% growth in fiscal 2026, just one quarter into the new year.

"Continued strength in new customer adds point to an AI and data strategy that is resonating strongly in the market," it said.

Morgan Stanley raised its price target to $300 from $245 while keeping its overweight rating.

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