HSBC analysts upgraded Snowflake stock to a Buy rating on Monday, setting a price target of $289 and pointing to the company's expanding AI-powered revenue streams and stronger customer commitments as signs the data-cloud company is gaining traction against major cloud rivals.
The upgrade and its rationale
HSBC's new price target implies roughly 25% upside from Snowflake's recent trading levels. The upgrade follows a period where Snowflake shares have lagged some tech peers, weighed by concerns over slower growth and competition from Amazon Web Services, Microsoft Azure, and Google Cloud. HSBC argued that Snowflake's investments in artificial intelligence are starting to pay off, with customers not only spending more but locking into longer-term contracts.
AI as a growth engine
Snowflake has been embedding AI tools into its data platform, allowing clients to run machine learning models directly on their data without moving it elsewhere. The company says this reduces friction and speeds up time-to-insight. HSBC noted that early AI-related workloads are generating incremental revenue and that the trend appears sustainable as enterprises experiment with generative AI and data analytics. The upgrade highlights Snowflake's ability to differentiate itself from the big cloud providers' own data services.
Customer commitment deepens
Beyond AI, HSBC flagged a rise in customer commitment levels. Snowflake's net revenue retention rate has historically been high, but recent quarters showed customers signing larger multi-year deals. This shift suggests clients view Snowflake as a core part of their data infrastructure, not just an experimental add-on. The bank sees this as a buffer against competition and a sign that Snowflake's platform is becoming stickier.
Competition from cloud giants remains real
Still, the upgrade comes with an acknowledgment of the competitive landscape. Amazon's Redshift, Microsoft's Synapse, and Google's BigQuery all offer similar cloud data warehousing capabilities. Snowflake's edge has been its ease of use and cross-cloud portability, but the hyperscalers are investing heavily in matching those features. HSBC's thesis depends on Snowflake maintaining its technological lead while the cloud giants play catch-up.
What comes next
Snowflake reports its next quarterly earnings in late February. Investors will be watching for updates on AI-related bookings and any changes in customer contract lengths. The HSBC upgrade adds a bullish voice to a stock that has seen mixed analyst opinions, but the real test will be whether Snowflake can deliver numbers that justify the $289 target.
