Snowflake Inc (NYSE: SNOW) rallied more than 30% this morning on the back of a solid third quarter and raised guidance for the full year.
Still, Kash Rangan – a Goldman Sachs analyst is convinced you haven’t missed the boat in SNOW as it’s poised for continued gains ahead.
Rang sees Snowflake stock as competitively positioned to “capitalize on a generational shift of data and analytics to the cloud.”
Shares of the California-based company do not currently pay a dividend.
Snowflake stock could hit $220 next year
Goldman Sachs maintained its “buy” rating on Snowflake stock on Thursday. Its $220 price target indicates potential for another 30% upside from here.
Kash Rangan expects SNOW to sustainably grow revenue at an accelerated rate on the back of “strong secular tailwinds including cloud adoption, big data, AI/ML, and secure data sharing.”
Shares of the cloud company are soaring today also because it announced plans to team up with the Amazon-backed AI startup Anthropic.
The multi-year strategic partnership will deliver Claude models to customers in Snowflake Cortex AI.
Additionally, Sridhar Ramaswamy – the chief executive of Snowflake Inc. expressed confidence in the company’s ability to grow its business with the federal government on the earnings call.
Snowflake stock is on course to record its best day ever on Thursday.
SNOW is an AI play
Snowflake raised its product revenue guidance for the full year today to $3.43 billion which suggests about a 29% year-on-year increase.
Analysts, in comparison, had called for $3.36 billion instead.
The company’s upbeat guidance made JPMorgan raise its price objective on SNOW as well.
The investment firm dubbed Snowflake stock an exceptional name among software companies due to “the combination of alignment to secular trends like data growth and digital transformation, very rapid revenue growth at scale, and a solid, efficient business model” in its research note on Thursday.
Note that Snowflake offers you exposure to the artificial intelligence market that Statista forecasts will grow at a compound annualized rate of more than 28% through the end of 2030.
Snowflake’s loss widened in Q3
On the downside, Snowflake reported $324 million of net loss for its third financial quarter which translates to 98 cents a share.
A year ago, the data storage firm had lost 65 cents per share only.
Analysts had also called for a narrower 97 cents a share loss for its Q3. So, the possibility of a moderate pullback in Snowflake stock once the post-earnings frenzy subsides can’t be entirely ruled out.
But the prospects of this company should deliver some confidence to investors in buying any dip that may materialize in the coming weeks.
Note that our market analyst Ritesh A. had recommended buying Snowflake shares ahead of the earnings release.
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