Snowflake (SNOW) has just received some praise from Wall Street. Top-rated analyst, Bradley Sills from Bank of America Securities, has upgraded the cloud data company to Buy from Hold, raising the price target to $240 (25.7% upside) from $220. The move signals rising optimism ahead of SNOW’s Q2 earnings report on August 27.
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The upgrade comes even though SNOW stock has faced investor concerns fueled by rival Databricks’ $100 billion valuation plans.
Sills believes Snowflake is gaining strong momentum in three key areas: core data warehouse business, as well as its emerging Cortex AI and Snowpark developer platforms.
The analyst now forecasts Snowflake’s Q2 product revenue to reach $1.06 billion, which is about 2.5% higher than the company’s guidance.
Rising AI Adoption Signals Strong Growth
“We experienced a clear uptick in demand trends,” Sills wrote, citing customer surveys, web traffic data, and channel checks that show rising adoption of Snowflake’s AI tools.
Channel checks conducted by BofA revealed that Snowflake’s partners are seeing increased customer adoption as the platform becomes a key part of their AI technology stack.
Also, a BofA survey revealed that over half of SNOW’s customers already use the platform for AI workloads. Moreover, customers expect to raise their spending on the platform by 12% over the next year, up from 9.5% in the previous year.
Overall, Sills sees Snowflake as well-positioned to benefit from the booming $155 billion AI software market.
Valuation Still Reasonable
Despite a 43% rise in Snowflake stock over the past year, Sills argues the valuation remains fair. The company trades at 1.5x its estimated 2026 free cash flow, adjusted for growth, slightly below the large-cap peer average of 1.6x.
With strong customer demand, new products, and a huge market opportunity, Sills sees room for the stock to run, especially if it reports upbeat Q2 earnings.
Analysts Expect Higher Earnings and Sales in Q2
Currently, Wall Street analysts expect Snowflake to report earnings of $0.27 in Q2, compared to $0.18 in the prior-year quarter. Also, the company’s revenue for Q2 is expected to rise 25.2% year-over-year to $1.09 billion.
Is Snowflake Stock a Good Buy?
Turning to Wall Street, Snowflake stock has a Strong Buy consensus rating based on 34 Buys and six Holds assigned in the last three months. At $232.73, the average SNOW stock price target implies a 21.98% upside potential.
