Under the data wave, why is Snowflake (SNOW.US) called Snowflake (SNOW.US) the “first choice for enterprise AI data platforms”?

The Zhitong Finance App learned that J.P. Morgan Chase (JPM.US) recently published an in-depth research report on the cloud data platform Snowflake (SNOW.US), which revealed to us a promising investment target in this field. As a leader in cloud data warehouse solutions, Snowflake is reshaping the cloud data management landscape with its strong scalability and elasticity. Xiaomo gave Snowflake an “overbearing” rating, and the target price was set at $225.

According to our understanding, Snowflake's core competitiveness lies in its cloud-native, multi-region architecture, and excellent data sharing capabilities. These advantages make it popular in various application scenarios such as data engineering science. Its services span a wide range of clients, from small startups to Fortune 10 companies, and can currently pursue market opportunities of $67-87 billion. Furthermore, Snowflake is building a new “data cloud” ecosystem, which is expected to use network effects to open up a wider market space.

At the product level, Snowflake is easy to use and has a clear value proposition, which has led to its rapid adoption among various businesses. Its latest product, Cortex, stands out for its simplicity, which helps customers quickly launch projects and achieve actual results, and is superior to competitors such as Amazon (AMZN.US) Bedrock. Snowflake is also actively embracing artificial intelligence technology, enabling customers to leap in efficiency from weeks to hours in tasks such as data queries through its Agents products. For example, a financial advisor used AI to respond to customer requests that would have taken a week in 45 minutes.

Additionally, Snowflake's advantage in sharing data across departments makes it more competitive in the current era of data-driven decisions. Its product system is improving, from lacking many features a year ago to now striving to build a 360-degree all-round platform to reduce customer dependency on other tools.

According to the Koma Research Report, Snowflake's recent financial data has performed well. For fiscal year 2025, its revenue is expected to be $3.626 billion, and adjusted EBITDA before interest, tax, depreciation and amortization is $567 million. Revenue is expected to grow to $4.515 billion and EBITDA of $758 million in fiscal 2026. In fiscal year 2027, revenue expectations were further raised to $5.419 billion, and EBITDA was $950 million.

Komo's valuation method for Snowflake is based on a ratio of 15 times corporate value to expected revenue for fiscal year 2026. Although this valuation multiplier is 12 times higher than the average of high-growth infrastructure software peers, this valuation premium is reasonable given Snowflake's better recent revenue growth rate of 26% and long-term free cash flow margin of 25%.

Although Snowflake has taken a leading position in cloud data warehouses, competitive pressure cannot be ignored. On the one hand, public cloud service providers rely on their deep technical heritage and financial strength to continuously optimize their data solutions in an attempt to close the gap with Snowflake. For example, competitors such as Databricks frequently “get in touch” with Snowflake in the field of data processing and analysis, but currently Snowflake is still showing strong competitiveness in the market, and there is even a trend of expanding its market share recently.

On the other hand, with the integrated development of big data and artificial intelligence, more and more software-as-a-service companies are also trying to cross borders into the data platform circuit, which has undoubtedly intensified market competition. However, with its first-mover advantage, technical barriers, and good customer reputation, Snowflake maintains an advantage in competition, and is known as the first choice for enterprise AI data platforms, and continues to lead the development of the industry.

However, investing in Snowflake also has many potential risks. At the macroeconomic level, if the US or global economy falls into recession due to factors such as inflation, monetary policy tightening, and geopolitics, it will have an impact on Snowflake and its terminal market, which in turn will affect its growth and valuation.

From the company's own perspective, if Snowflake's investment in sales and marketing does not effectively translate into customer growth and revenue growth, losses may exceed expectations. Additionally, as a cloud-native service provider, Snowflake faces the risk of data security and system failure. If a security incident or long-term system failure occurs, it will not only damage customer interests, but also seriously impact the company's reputation and business development.

Currently, the wave of digital transformation is sweeping all industries, and the importance of data as a core asset is becoming more and more prominent. As a data cloud infrastructure provider, Snowflake can break down data silos for enterprises, enable efficient data sharing and deep mining, help enterprises unlock data value, and accelerate the digital transformation process. At the same time, the rapid development of artificial intelligence technology has also brought new opportunities to Snowflake. Its platform is deeply integrated with AI technology, enabling enterprises to use AI to make intelligent decisions, automate processes, etc. on a data-driven basis, and further enhance the efficiency and competitiveness of enterprise operations.

Overall, J.P. Morgan's research report provides an in-depth analysis of the investment value of Snowflake. Despite facing market competition and macroeconomic risks, with its outstanding product advantages, good financial performance, and in line with industry trends, Snowflake has broad development prospects in the field of cloud data platforms, which is expected to bring considerable returns to investors.