According to DA Davidson, Snowflake is an emerging player in the world of artificial intelligence that is on its way to victory. Analyst Gil Luria gave the stock a buy rating. His $200 price target suggests an upside of 25.1% from the stock’s closing price on Thursday. The cloud data provider is up nearly 11.4% year to date, but is down 9.2% this quarter. “Even after the cloud optimization efforts that plagued software companies this year, we see Snowflake in an advantageous position,” Luria wrote in Thursday’s note. “They are achieving world-class growth rates and are well-positioned as a cloud data company to benefit from the increasing demand for artificial intelligence.” According to Luria, the company’s expansion into machine learning is a “new area with significant growth potential.” DA Davidson’s own developer data suggests that activity related to machine learning workloads is expected to grow 31% in the third quarter of 2024, which Luria says is contributing to Snowflake’s growth. “Given recent acquisitions and the general availability of artificial intelligence-focused products in the next fiscal year, we believe Snowflake is positioned to explore new growth avenues in the near and long term,” Luria said. Snowflake announced in late June that it was partnering with Nvidia to give companies the ability to build customized generative AI applications using their own proprietary data using the Snowflake Data Cloud platform. Although the stock has seen declines recently, Luria said the slowdown is priced in, noting that selling software has proven difficult in 2023. Snowflake’s fourth-quarter 2023 guidance suggests the company’s cloud optimization efforts will stabilize in the second half of fiscal 2024, he added. “The rising tide of generative AI has given everyone a boost. However, we believe Snowflake is one of the few companies that has a meaningful opportunity to benefit from the increasing demand for artificial intelligence,” the analyst said. —CNBC’s Michael Bloom contributed to this report.
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