Snowflake (NYSE:SNOW) received a Neutral rating from Macquarie as the investment firm initiated coverage on the cloud data platform provider Wednesday.

Analyst Steve Koenig said the company is well-positioned within the cloud data warehousing segment and continues to expand into areas such as artificial intelligence and data engineering.

• Warning! GuruFocus has detected 3 Warning Signs with SNOW.

He noted Snowflake's disciplined approach, product differentiation, and sales execution, as well as a strong Rule of 40 score a metric often used to assess software company performance.

At the same time, Koenig highlighted a number of potential headwinds. Snowflake's fiscal 2026 product revenue guidance was characterized as more aggressive than prior forecasts, offering limited room for upside.

He also mentioned growing competition with Databricks and raised concerns about how Snowflake compares to larger hyperscalers in leveraging generative AI opportunities.

Additionally, the company's consumption-based revenue model could face pressure if economic conditions tighten, Koenig noted. 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.

It's important to note that Snowflake's stock saw a sharp pullback recently, dropping 15.56% over the past month and 8.16% in the last week. Despite the short-term weakness, it posted a strong 35.66% gain over the past six months. Year-to-date, it's down slightly at -3.15%, still faring better than the S&P 500's -4.23% decline.