Snowflake Inc. (NYSE:SNOW) traded little changed Friday as investors weighed its AI-driven growth narrative against rising competition and a premium valuation.
The company is pitching its platform as essential infrastructure for enterprise analytics and AI workloads.
Analysts’ Take
Bank Of America analyst Koji Ikeda reiterated the Buy rating on the stock, lowering the price forecast from $310 to $275.
The analyst writes that investors debate whether product revenue can maintain a high 20% growth or reaccelerate. The outcome remains achievable as Snowflake expands products and rides AI demand.
Ikeda said customers should keep increasing spend as broad AI adoption gathers momentum. Snowflake can serve as foundational infrastructure for enterprise data and AI workloads.
He expects top-tier growth versus infrastructure software peers, alongside improving free cash flow margins.
Ikeda said Snowflake helps companies make sense of massive and complex datasets.
He described it as a cloud data platform that separates storage from compute for flexible scaling.
Snowflake's leadership should help win new clients and deepen existing relationships. The analyst highlighted that the platform can capture a larger share of enterprise data workloads over time.
However, the price forecast was trimmed owing to shifting growth views, rising risks and sector multiple compression as key drivers.
Ikeda acknowledged the stock trades at a premium versus infrastructure software peers. He said the valuation looks more reasonable when adjusted for growth rates.
Ikeda flagged competition as the key risk, especially from hyperscalers and Databricks. He said stronger rivals could pressure pricing and force heavier investment in innovation.
He added that reliance on hyperscaler infrastructure could create structural disadvantages over time.
Snowflake Price Action: SNOW shares are trading lower by 0.6% to $198.13 at last check on Friday.
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