Bank of America upgrades Snowflake heading into earnings, sees more than 20% upside

Bank of America upgraded Snowflake (SNOW) to Buy from Neutral and raised its price target to $240, implying over 24% upside, ahead of the company's Q2 earnings release on August 27. Analyst Brad Sills anticipates solid financials and long-term outperformance, citing Snowflake's increasing traction in the $155 billion AI market and positive web data suggesting product revenue will exceed guidance. This upgrade reinforces broader Street bullishness, with the stock up 46% year-over-year despite recent pressure, and prompted a 2.5% premarket climb.

Analysis

Bank of America has upgraded Snowflake (SNOW) to Buy from Neutral, increasing its price target to $240, which suggests a potential 24% upside ahead of the company's Q2 earnings report on August 27. The upgrade is underpinned by both short-term data signals and a long-term strategic thesis. The analyst, Brad Sills, anticipates solid quarterly results, citing a 42% year-over-year increase in SimilarWeb total page views as a leading indicator that suggests product revenue could surpass company guidance by 2.5%. This positive data point strengthens the view that demand trends are at an inflection point. More strategically, the call for long-term outperformance is based on Snowflake's increasing traction within the substantial $155 billion addressable market for AI software. This bullish stance from a major bank reinforces the broader market consensus, where 41 analysts rate the stock a buy or strong buy against only nine holds. Despite a recent 11% pullback in the past month, the stock's 46% gain over the past year has significantly outpaced the S&P 500, indicating strong underlying momentum that the BofA upgrade has already amplified with a 2.5% premarket gain.

Key Decisions for Investors

• Investors with a bullish thesis on Snowflake may view the recent 11% stock price decline as a tactical entry point, supported by Bank of America's positive outlook and specific data signals ahead of earnings.
• Monitor the upcoming Q2 earnings report on August 27 closely, with a specific focus on product revenue growth relative to guidance and any management commentary that validates traction in the AI market.
• Given the stock's significant 46% year-over-year appreciation and the strong bullish consensus, be aware that high expectations are priced in, and any failure to meet or beat these expectations could present a considerable downside risk.