Goldman Sachs raises Snowflake stock target to $230

On Thursday, Goldman Sachs analyst Kash Rangan updated the firm’s outlook on Snowflake Inc . (NYSE: NYSE:SNOW), lifting the price target to $230 from the previous $205. The Conviction Buy rating remains unchanged, reflecting confidence in the company’s financial performance and future prospects. According to InvestingPro data, Snowflake currently trades near its Fair Value, with a market capitalization of approximately $60 billion. The company maintains strong growth metrics despite trading at premium multiples, which has caught analysts’ attention.

The adjustment in the price target follows Snowflake’s impressive first-quarter results, which surpassed consensus expectations. Product Revenue saw a 3.6% increase above consensus, with the company’s remaining performance obligations (cRPO) growth accelerating to 31%, compared to 27% in the previous quarter. The company maintains robust revenue growth of 29.2% year-over-year, with a healthy gross profit margin of 66.7%. Operational margin (OpM) was also notably higher, up by 400 basis points above consensus. However, the free cash flow (FCF) was 48% below consensus, though Snowflake reiterated its fiscal year 2026 free cash flow margin (FCFM) target of over 25%.

Snowflake’s stock responded positively in after-hours trading, indicated to rise by 7%, following a 31% increase over the last month. Analysts believe that investors are recognizing the significance of Snowflake’s product revenue outperformance in the first quarter, as well as the company’s second-quarter guidance, which is 1.5% above consensus. The modest true-raise to the fiscal year 2026 outlook is seen as better than expected.

The company has also demonstrated resilience against potential macroeconomic demand issues, which has reinforced confidence in its guidance for fiscal year 2026. Investments in go-to-market enablement for AI services, including incentives for new consumption, are paying off, with increasing customer adoption of AI and machine learning features. Over 5,200 customers are using these features weekly in the first quarter.

Snowflake’s growing partnership ecosystem, which includes collaborations with Anthropic and OpenAI, and a significant increase in strategic enterprise commitments (with reported performance obligations rising by $6.7 billion, or 34%) contribute to the positive assessment. Goldman Sachs anticipates that Snowflake’s evolving role as a comprehensive data operating system, managing a range of data-related tasks, will sustain its mid-20s growth rate at scale with industry-leading free cash flow margins.

Looking ahead, the Snowflake Summit and Analyst Day, scheduled for June 2-5, are expected to serve as the next catalysts for the company, potentially offering further insight into its growth trajectory and product developments. InvestingPro analysis reveals several key insights about Snowflake’s financial position, including strong liquidity and moderate debt levels. For deeper analysis and additional ProTips, including detailed valuation metrics and growth forecasts, investors can access the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Snowflake Inc. reported a strong first-quarter performance with total revenue reaching $1.042 billion, marking a 26% year-over-year increase and surpassing consensus estimates. This growth was supported by significant deals, including two contracts exceeding $100 million each, and a robust product revenue increase. The company has projected second-quarter product revenue around $1.038 billion, reflecting a 25% year-over-year growth, slightly ahead of market expectations. Additionally, Snowflake raised its fiscal year 2026 product revenue outlook to $4.325 billion, indicating continued confidence in its growth trajectory.

Analysts have responded positively to Snowflake’s performance, with JPMorgan, Barclays (LON:BARC), UBS, Piper Sandler, and Wolfe Research all raising their price targets for the company’s stock. JPMorgan increased the target to $225, while Barclays set it at $219, and UBS raised it to $210. Piper Sandler adjusted their target to $215, and Wolfe Research lifted it to $230. These analysts highlighted Snowflake’s strong fundamentals, growth potential, and strategic positioning in data warehousing and AI as key factors for their optimism.

Despite economic uncertainties, Snowflake’s focus on innovation and strategic partnerships, such as those with Microsoft (NASDAQ:MSFT), have contributed to its ability to maintain high growth rates and improve operational efficiency. The company’s ability to exceed expectations in a challenging environment has reinforced investor confidence and positioned it as a leading player in the enterprise data services sector.

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