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LivestreamMenuArtificial intelligence is accelerating the next phase of Snowflake’s growth, and it’s raising Wells Fargo’s outlook for the stock. The bank reiterated its overweight rating on the software company’s stock in a Wednesday note. It also hiked its price target to $500 from $320, the highest level on the Street, according to LSEG. That implies a nearly 85% gain from Tuesday’s close. Earlier this year, fears about AI disrupting the software-as-a-service business model led shares of Snowflake to at one point be down more than 44%. But the stock is now up for the year by more than 20%, and analyst Ryan MacWilliams thinks Snowflake in reality will be an AI beneficiary rather than a victim. “The game has changed. AI agents are accelerating spend higher on SNOW, and investors underappreciate upside potential as AI becomes the primary driver of growth,” MacWilliams wrote. “SNOW is a near-term AI beneficiary without capex requirements or model dependence.” SNOW YTD mountain Snowflake year-to-date. MacWilliams added that the fear over the software-as-a-service future changed in the second quarter when strong AI coding tools and agents at Snowflake came online for customers. According to a survey that Wells Fargo conducted with Snowflake customers, AI is driving businesses to spend more on Snowflake than before. It’s also leading to greater consumption of the company’s products, as well as pushing customers to upload more data to Snowflake’s platforms to integrate with AI. All of this makes MacWilliams think Snowflake shares deserve a stronger premium. Snowflake currently trades at 127 times forward earnings. He said that the company should trade closer to Cloudflare and Crowdstrike’s multiples, which are 204 and 139 times, respectively. “Accelerating growth driven by AI at this scale, without AI capex or AI-model lab exposure, is a scarce asset that warrants this premium multiple,” MacWilliams wrote. Shares were up more than 1% following the target hike. Analysts are generally bullish on Snowflake, with 46 of 52 rating it a buy or strong buy, according to LSEG.Read More
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