Snowflake (SNOW) shares are facing a steep decline in pre-market trading, plummeting 6.29% following a significant drop in the previous session. The sell-off intensified after Macquarie initiated coverage of the cloud data platform provider with a Neutral rating and a $160 price target, raising concerns about the company's growth prospects.

Macquarie analyst Steve Koenig, while acknowledging Snowflake's strong position in the cloud data warehousing segment, highlighted several potential headwinds. These include Snowflake's aggressive fiscal 2026 product revenue guidance, growing competition from companies like Databricks, and questions about its positioning against larger hyperscalers in leveraging generative AI opportunities.

Investors appear to be reassessing their positions in light of Macquarie's analysis, leading to continued selling pressure in the pre-market session. The market's reaction suggests heightened sensitivity to growth concerns for high-profile tech stocks like Snowflake, especially given the company's consumption-based revenue model which could face pressure if economic conditions tighten. As trading opens, market participants will be closely watching to see if Snowflake can stabilize or if the downward trend will persist.