Snowflake recorded the best day in its history. HSBC believes this is not the limit

Shares of cloud data platform developer Snowflake are still attractive even after the previous day's 36% growth - the strongest one-day jump in the history of observation - according to HSBC. Similar optimism is shared by Bank of America analysts, who forecast the potential for further growth of quotations.

Snowflake shares are adding 3.4% in May 29 trading, up 12% YTD.

HSBC raised its recommendation on Snowflake from "hold" to "buy" and raised its target price from $176 to $289 per share, CNBC reports. The new forecast suggests a 20.8% increase in the shares of the cloud platform developer relative to their price at the close of trading on Thursday.

On Ma. 28, Snowflake's stock soared more than 36%, posting its best performance ever. The markets reacted to the company's announcement of its intention to spend $6 billion to buy computing power from Amazon. Snowflake also reported better-than-expected financial results for the first quarter thanks to demand for its artificial intelligence tools, such as Cortex Code (CoCo), an AI agent built into Snowflake's platform designed to accelerate data processing, analytics, and machine learning tasks.

"We believe CoCo serves as the clearest evidence of the AI monetization opportunity for Snowflake," wrote HSBC analyst Stephen Bursey. He noted that CoCo's user base has grown to more than 7,100 accounts and has "generated significant AI revenue for [the company]." He said the current performance supports the bank's view that artificial intelligence is now accelerating both the company's direct revenue generation from AI technologies and the growth in consumption of its underlying cloud services. "In addition, we expect deepening adoption of [Snowflake's] AI-based products as more of [the company's] customers move from pilot projects to production workflows," he added.

Despite Thursday's powerful rally, Snowflake's capitalization has gained just 9% since the beginning of the year, as of Ma. 28, lagging the S&P 500 index, which has added 10.5% over the same period. The company's stock has been hit hard by concerns that artificial intelligence will take market share away from software-as-a-service (SaaS) providers. By mid-April, Snowflake's stock had fallen as much as 44% from the beginning of the year, but by now it has soared 102% from its local bottom.

The attractiveness of Snowflake shares even after such a jump is recognized by Bank of America, pointing to the company's strong momentum last quarter, Business Insider reports. The bank's analysts raised their target price on the stock to $300, suggesting another 23% upside potential from Thursday's high.

"Everyone is optimistic. We believe that [the company's] results and outlook [for the second quarter and the rest of the year] provide strong evidence to support our long-term positive view that Snowflake is increasing its share of the large and expanding AI business intelligence market," the bank said.

Bank of America emphasized the company's key product revenue growth, the "key growth metric," which increased 34% year-over-year last quarter. The analysts said this metric is likely to rise if the company continues to demonstrate "effective execution" in the next quarter.

Analysts at the bank believe that the next catalyst for the stock could be Snowflake's annual client conference, which will be held over the next few weeks. The developer is expected to unveil new products at the event, with a special emphasis on AI-based tools.

"Demonstrating big wins with corporate clients and real use cases could also be a boost [to business development and Snowflake's quote], as it would help dispel pessimistic claims that the corporate segment is becoming too oversaturated," BofA said.

Overall, Wall Street analysts covering the company's stock are also positive on Snowflake's stock, with 46 of 52 advising to buy it. The remaining six are neutral and advise to keep them in the portfolio.

This article was AI-translated and verified by a human editor