On Friday, Evercore ISI sustained its positive stance on Snowflake Inc . (NYSE: NYSE:SNOW), maintaining an Outperform rating and a $170.00 price target. The firm's optimism is based on a survey conducted with decision-makers at 15 large partners, which indicated a slight quarter-over-quarter improvement in sentiment.
The survey results, combined with insights from a recent partner lunch, suggest that Snowflake's product growth could reach a turning point in Calendar Year 2025 and possibly pick up pace if its artificial intelligence (AI) offerings spur data consumption.
The survey highlighted several key observations. Firstly, 60% of partners now view their business as better than it was 3 to 6 months ago, a notable increase from the 47% reported in the previous quarter's survey.
Secondly, expectations are high for Snowflake's consumption revenue, with 60% of partners anticipating acceleration over the next 12 months, compared to 40% in the last quarter. This optimism is partly attributed to the demand generated by Snowflake's GenAI for data modernization projects.
Furthermore, the survey revealed that AI adoption is still in its infancy, with about one-third of customers engaged in pilot programs. The partners also shared insights on Snowflake's Iceberg initiative, which is in the very early stages, but open table formats are expected to significantly impact the market in the coming years.
Lastly, partners perceive Snowflake as a 'winner' in terms of gaining wallet share, with no significant shifts observed in the competitive landscape. The larger hyperscalers are mentioned most frequently, followed by Databricks, as the main competitor.
In other recent news, Snowflake Inc. has seen a series of notable developments. The company reported a 30% year-over-year increase in product revenue, hitting $829 million for its second quarter of fiscal year 2025, and subsequently raised its full-year product revenue outlook. In addition, Snowflake completed a significant $2.3 billion convertible debt offering.
On the analyst front, Goldman Sachs maintained its Conviction Buy rating on Snowflake with a steady price target of $220.00, while KeyBanc Capital Markets adjusted its outlook, reducing the price target to $150 but retaining an Overweight rating.
Monness Crespi Hardt also upgraded Snowflake from Neutral to Buy, setting a new price target of $140.00.
In terms of product innovation, Snowflake unveiled new features to enhance the development of AI-powered applications for enterprises and introduced several enhancements to its data platform, including the Snowflake Open Catalog and Document AI.
These recent developments indicate Snowflake's continued commitment to improved execution and quicker product innovation.
InvestingPro Insights
To complement Evercore ISI's optimistic outlook on Snowflake Inc. (NYSE: SNOW), recent data from InvestingPro provides additional context for investors. Despite the company's strong market position and potential for growth, particularly in AI-driven data consumption, Snowflake faces some financial challenges.
InvestingPro data shows that Snowflake has a substantial market capitalization of $43.33 billion, reflecting investor confidence in its long-term prospects. The company's revenue growth remains robust at 31.21% over the last twelve months, aligning with the survey's positive sentiment on future consumption revenue acceleration.
However, InvestingPro Tips highlight that Snowflake is not currently profitable, with a negative P/E ratio of -42.6. This metric underscores the importance of the company's potential turnaround in product growth, as suggested by Evercore ISI's survey for Calendar Year 2025. On a positive note, another InvestingPro Tip indicates that analysts predict the company will become profitable this year, which could be a significant catalyst for the stock.
Investors should note that Snowflake is trading at a high revenue valuation multiple, according to InvestingPro Tips. This premium valuation suggests that the market has already priced in substantial growth expectations, which the company will need to meet or exceed to justify its current stock price.
For those interested in a deeper analysis, InvestingPro offers 7 additional tips for Snowflake, providing a more comprehensive view of the company's financial health and market position.
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