TD Cowen reiterates Snowflake stock rating ahead of earnings By Investing.com

TD Cowen reiterated a Buy on Snowflake with a $255 target, implying about 49% upside from the current $171.27 share price. The firm cited strong partner conversations, accelerating consumption trends, Snowpark and machine learning adoption, and emerging AI usage ahead of Snowflake’s May 27 earnings report. Additional bullish support came from Benchmark raising its target to $200 and expectations for another quarter of growth acceleration.

Analysis

The setup is less about the headline analyst upgrades and more about the operating leverage hidden in Snowflake’s consumption model. If partner checks are right, the key inflection is not raw revenue growth but the mix shift toward higher-frequency workloads: that tends to pull forward gross retention improvements and compress the time between usage spikes and recurring budget resets. The market is still pricing Snowflake like a high-beta software name, but if AI and migration workloads are broadening seat-to-consumption behavior, the multiple can re-rate before the next quarter even prints.

Second-order winner is the broader AI infrastructure stack: stronger Snowflake utilization implies more data prep, orchestration, and model-serving activity upstream, which should support spend for adjacent cloud and semiconductor ecosystems even if SNOW itself becomes more efficient. The risk is that this is a “good quarter, weak guide” setup—one strong print can be offset if management frames demand as lumpy or if large-deal conversion remains uneven. That matters because the stock likely needs a clean upward revision cycle, not just in-line beats, to sustain a move beyond recent resistance.

The contrarian view is that consensus may be over-indexing on AI branding while underestimating how much of the near-term upside is still driven by old-fashioned consumption acceleration and migration timing. If those drivers are real, the move is underdone because revenue visibility should improve just as profitability becomes more credible; if they are not, downside can be sharp because the stock has already de-rated enough to leave less room for disappointment. The next two weeks are all about whether commentary confirms velocity, not whether the company can merely beat consensus by a small margin.

Key Decisions for Investors

• Go long SNOW into the May 27 print via a 2-4 week call spread, targeting upside if management confirms consumption acceleration; risk/reward favors defined-risk bullish exposure because the stock is still below consensus target but vulnerable to a guide-down.
• Pair trade: long SNOW / short a basket of lower-quality SaaS names with slower consumption re-acceleration over the next 1-2 months; if Snowflake proves AI and migration are real spend drivers, capital should rotate toward names with visible usage improvement.
• If already long SNOW, trim 25-33% into any pre-earnings strength and keep a runner through earnings; the base case is a beat, but the main hazard is a strong print followed by cautious forward commentary.
• Avoid chasing NVDA or HAL on this story alone; the read-through is more about enterprise data spend and workflow normalization than direct order uplift, so any second-order benefit is likely slower and less tradable into the event.
• Post-earnings, add only on confirmation that guidance implies a multi-quarter acceleration, not just one-quarter noise; if the guide is merely in line, fade strength given the stock’s still-fragile post-peak sentiment.