Snowflake's AI-driven data momentum justifies Buy rating: UBS
Yahoo Finance ·
Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. UBS is telling clients that artificial intelligence is translating into real, growing spend on Snowflake, and the bank remains Buy-rated on the stock heading into its fiscal second-quarter results on September 2. The bank's analysts spoke with seven enterprise partners and customers to gauge demand trends, adoption of Snowflake's Cortex Code and Coco tools, and the risk that large language models could eat into spending on established data software vendors. The checks came back strong, according to UBS, with customers and partners largely expecting their Snowflake spend to accelerate, helped by continued Coco adoption. Companies are increasingly focused on their data layer as new AI applications and agents need access to corporate data, UBS said, a dynamic that is making Snowflake, along with Databricks, Microsoft and others, more essential to enterprise infrastructure. On competition, UBS said Databricks came up most often as the company taking share, with Microsoft also mentioned. UBS also flagged a growing push among enterprises to better operationalize their data with AI models to improve returns, which typically requires a data ontology layer such as a semantic layer or knowledge graph. The bank called this a direct positive for Palantir. One investor worry UBS tested directly: that frontier AI models are getting good enough at data tasks that companies could bypass data software vendors altogether and use the models on their own. UBS said its checks found little evidence of this happening, concluding that very few enterprises are using LLMs' data capabilities in a way that is cutting into spending on Snowflake, Palantir or Databricks. Still, UBS acknowledged the setup into the print is not simple. Investors are pricing in revenue growth of 36 to 37% for the fiscal second quarter, with growth expected to exit fiscal 2027 in the high-30s to 40% range. UBS said its demand checks support those targets. Snowflake shares are up more than 50% year to date and trade at 15 times revenue and 62 times free cash flow on calendar 2027 and fiscal 2028 estimates, a valuation UBS described as leaving little room for error. UBS raised its price target on Snowflake to $425 from $370, based on roughly 15.5 times calendar 2028 estimated EV/sales and 62 times EV/free cash flow, down from its prior 17.5 times and 73 times multiples on calendar 2027 estimates. The bank kept its Buy rating, citing confidence in the durability of the current data investment cycle.
AI 시장 분석
UBS maintained its Buy rating on Snowflake and raised its price target to $425, driven by expanding artificial intelligence demand. As enterprise customer data spending accelerates, related software companies like Palantir are expected to benefit. Investors are pricing in 36% to 37% revenue growth for the second quarter of the fiscal year, and despite high valuation pressures, expectations for sustained growth remain strong.
상승 영향
- AI — Enterprise adoption of AI applications directly accelerates spending on data software like Snowflake and Palantir, driving expected revenue growth.
DYAX 전담 분석
UBS channel checks indicate that increased enterprise data infrastructure spending following the adoption of AI applications is supporting earnings growth for data software companies such as Snowflake and Palantir. Concerns that LLMs would replace legacy data software have proven unfounded, and high growth rates exceeding 30% serve as the core justification for valuations.
The bullish scenario is that the September 2 earnings release will present guidance exceeding market expectations, continuing the upward stock trend. The bearish scenario is that, amid a stock price that has already surged over 50% and demanding valuations (EV/Sales of about 15x), even a minor earnings miss could trigger a sharp correction. Key monitoring indicators are the actual adoption rates of Coco and Cortex tools and the growth rate of customer data spending.
AI가 생성한 분석으로 투자 자문이 아닙니다.
DYAX Investor Sentiment
Bullish (Long) 53% · Bearish (Short) 47%
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