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Investing.com -- Bank of America Securities (BofA) lifted its rating on Snowflake (NYSE:SNOW) to Buy from Neutral and raised its price objective (PO) to $240 from $220, citing strengthening demand trends and long-term growth prospects in AI and data services.
The new price target implies nearly 25% upside from the last closing price.
BofA analysts pointed to multiple data sources signaling positive momentum ahead of Snowflake’s August 27 earnings.
“We upgrade Snowflake to Buy from Neutral, and raise our estimates, and PO to $240…given three distinct proprietary data sources which point to momentum in Snowflake’s data warehouse and emerging Cortex AI and Snowpark developer businesses.”
BofA expects Q2 product revenue of about $1.06 billion, roughly 2.5% above company guidance, supported by stronger web activity trends.
Channel checks also reflected an improving backdrop. Partners noted that customers are increasingly turning to Snowflake as a critical part of the AI technology stack, with Snowpark and Cortex AI showing strong adoption.
Demand pipelines are said to be robust, with shorter sales cycles and open budgets for AI-related projects.
BofA’s survey work further supports its bullish stance. The bank’s inaugural poll of Snowflake customers showed spending intentions accelerating, with respondents expecting to increase spend by 12% over the next twelve months versus 9.5% in the prior year.
Over half of respondents already use Snowflake for AI workloads, underscoring its transition into a broader AI data platform.
In terms of potential risks, analysts flagged competition and the company’s consumption-based revenue model, but highlighted the large and growing $155 billion addressable AI software market as a key opportunity.
“While we believe that Q2 earnings will be a catalyst for the stock given multiple positive data points outlined below, our call is for outperformance over the long term given incremental traction with products addressing a significant larger addressable AI market for software of $155bn,” analyst Brad Sills wrote.