Shares of Snowflake (SNOW) tumbled 5.14% in after-hours trading on Wednesday following Macquarie's initiation of coverage with a Neutral rating and a $160 price target. The investment firm's balanced stance on the cloud data platform provider appears to have sparked a sell-off among investors.
Macquarie analyst Steve Koenig acknowledged Snowflake's strong position within the cloud data warehousing segment and its expansion into areas such as artificial intelligence and data engineering. He praised the company's disciplined approach, product differentiation, and sales execution. However, Koenig also highlighted several potential headwinds that could impact Snowflake's growth trajectory.
Key concerns raised by Macquarie include Snowflake's aggressive fiscal 2026 product revenue guidance, which offers limited room for upside compared to previous years. The analyst also pointed out growing competition from Databricks and questioned Snowflake's positioning against larger hyperscalers in leveraging generative AI opportunities. Additionally, the company's consumption-based revenue model could face pressure if economic conditions tighten. While acknowledging Snowflake's ability to disrupt the $80 billion database management system market, Macquarie ultimately found the positives and risks to be evenly matched, justifying its Neutral stance.
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