Snowflake Inc (NYSE:SNOW)’s artificial intelligence strategy is showing increasing signs of commercial traction, according to Jefferies analysts, who reiterated their ‘Buy’ rating and $300 price target on the cloud data platform company following its user conference and investor day in San Francisco.
This price target implies upside from current levels of about $245.
The analysts wrote that they came away with greater conviction in Snowflake's AI monetization opportunity, particularly through CoCo, the company's coding agent, which they believe is beginning to drive customer expansions alongside its core data warehousing business.
According to Jefferies, conversations with partners and customers suggested that CoCo has become significantly more reliable since April and performs particularly well on Snowflake-specific data workflows. The firm wrote that the tool can outperform third-party coding agents in areas such as text-to-SQL generation because it leverages Snowflake's existing data governance and enterprise context.
The analysts noted that the current benefits from AI adoption appear to be centered on improving productivity and accelerating migrations rather than generating entirely new workloads. They wrote that customers are seeing returns primarily through faster execution and reduced implementation times.
Jefferies also highlighted what it described as improving go-to-market dynamics. The firm wrote that AI tools are helping shorten sales cycles, speed up customer adoption and increase the pace of migrations onto the Snowflake platform, although it noted that successfully embedding AI into the company's sales strategy remains an important execution focus.
At Snowflake's investor day, management emphasized that CoCo is helping existing users complete workflows more efficiently, with the analysts writing that the product's key advantage lies in its native integration with Snowflake's data and governance infrastructure rather than the underlying AI models themselves.
The firm also pointed to the longer-term potential of Snowflake CoWork, a personal AI agent designed for enterprise use cases, though it noted that adoption remains in its early stages and may require additional customer education.
From a financial perspective, Jefferies modestly raised its earnings estimates while leaving revenue projections largely unchanged. The analysts wrote that Snowflake's valuation of roughly 12 times calendar 2027 revenue appears reasonable for a company they expect to deliver more than 30% growth, while trading at a discount to some cloud software peers.
Jefferies also wrote that Snowflake could achieve GAAP profitability by the fourth quarter of fiscal 2028, driven by expanding operating margins and a declining level of stock-based compensation as a percentage of revenue.