Snowflake Q4 Preview: Analyst Sees 'Outsized Benefit' From AI Growth, Cloud-Native Data Platform 'Disrupting A Massive Market'

Snowflake Inc SNOW, will be reporting its fourth-quarter earnings on Wednesday, Feb. 28. Wall Street expects 18 cents in EPS and $759.10 million in revenues as the company reports after market hours.

Snowflake is known for its cloud-based data warehousing platform, providing scalable and efficient data storage, processing, and analytics solutions for organizations.

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The SNOW Analyst: Needham analyst Mike Cikos, CFA has a Buy rating on Snowflake stock with a price target of $265 (raised from $225) a share.

The SNOW Thesis: Cikos believes Snowflake is poised for a robust performance in FY24, with an expectation to outperform both revenue and margin guidance. To this end, he underscored the pivotal role of Cloud migrations, saying, “Cloud migrations continue to serve as a foundation to growth, especially as the last 18 months’ headwinds dissipate.”

“Snowflake is undertaking a meaningful expansion of the number of use-cases to go well beyond a ‘Data
Warehouse’ in pursuit of its vision of becoming a ‘Data Cloud,'” Cikos notes. “We believe Snowflake is disrupting a massive market with its Cloud-Native Data Platform.”

Further, as a Platform vendor, Snowflake is expected to gain an “outsized benefit” from Azure workloads, especially given Microsoft Corp‘s MSFT expansion in AI, highlighting its strategic edge. Notably, Snowflake has a 21% exposure to Azure, marking it as Snowflake’s most rapidly expanding hyperscaler.

The company is also focusing on Unstructured Data and leveraging the pending Applica acquisition. Snowflake’s strategic expansion beyond its primary use-case positions it as a formidable competitor against Databricks. Furthermore, growth vectors such as Snowpark introduce simplified architectures aligning with Snowflake’s multifaceted growth strategy.

SNOW Price Action: Share of Snowflake were up 1.1% to $233.49 at the time of publication Tuesday.

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