Snowflake (SNOW 0.88%) stock is gaining ground in Tuesday's trading. The company's share price was up 0.5% as of 3:30 p.m. ET and had been up as much 4.8% earlier in the session. Meanwhile, the S&P 500 index was down 0.3%, and the Nasdaq Composite index was down 0.7%.

Snowflake is climbing today in conjunction with bullish coverage from Oppenheimer but lost most of its early gains as the market turned from bullish to bearish. The firm published new coverage on the stock, maintaining an outperform rating and raising its one-year price target from $180 per share to $200 per share. As of this writing, the new price target suggests potential upside of roughly 22.5%.

Snowflake climbs on bullish coverage from Oppenheimer

Oppenheimer has named Snowflake one of its top investment ideas for this year. Ittai Kidron, the firm's lead analyst on the stock, thinks that the data-warehousing and analytics specialist will be able to deliver beat-and-raise quarters with its reports this year. The analyst thinks that beats will be powered by the rollout and scaling of new services and artificial intelligence (AI) offerings. He also expects that Snowflake's consumption-based business model will be better suited to drive strong results this year and sees potential for operating margin expansion now that the company is emerging from a period of heavier investment.

What comes next for Snowflake?

Even after some recent gains, Snowflake stock is still down roughly 59% from its high. The company now has a market capitalization of roughly $58.9 billion and is valued at approximately 15 times this year's expected sales.

With its last quarterly report, Snowflake's revenue increased 29% year over year to $900.3 million. The company posted a net revenue retention rate of 127% in the quarter, which is quite strong by most measures -- but it's also significantly below the retention rate the business was posting in previous years.

Snowflake has demand tailwinds at its back thanks to AI and large language model (LLM) systems, but the company is also facing increasing competition from cloud hyperscalers offering their own data integration solutions and specialized industry players including Databricks. The stock still has big upside potential at current prices, but it's also a risky play in the cloud software space.