HSBC upgrades Snowflake to Buy, sets price target at $289

HSBC analyst Stephen Bersey just handed Snowflake one of its most aggressive price targets on the Street. The bank upgraded the cloud data company from Hold to Buy on May 29, raising its price target from $176 to $289, a jump of roughly 64%.

The catalyst? Snowflake’s AI monetization story is finally showing up in the numbers, not just the pitch deck.

What drove the upgrade

Bersey’s thesis centers on three pillars: Cortex AI gaining traction, growing adoption of Snowflake’s CoCo capabilities, and a margin expansion story that’s starting to look real rather than aspirational.

The upgrade followed what the analyst described as a “strong beat and raise” earnings report. In English: Snowflake exceeded Wall Street’s expectations on both revenue and guidance, then told investors to expect even more going forward.

Snowflake shares responded accordingly, posting one of their strongest single-session performances in recent memory. The new $289 target sits above the consensus average of approximately $283, which itself reflects the views of somewhere between 41 and 51 analysts covering the stock.

The AI monetization angle

Snowflake already stores massive amounts of corporate data. Cortex AI lets companies do something useful with that data without shipping it somewhere else, allowing customers to build and deploy AI models directly within the Snowflake ecosystem.

CoCo adoption, specifically, is what caught Bersey’s attention as a leading indicator. The analyst views growing CoCo usage as a “clear indicator” that customers aren’t just experimenting with Snowflake’s AI features. They’re integrating them into production workflows, the kind of usage patterns that translate into durable, recurring revenue.

Margin expansion enters the picture because AI workloads tend to carry higher revenue per compute hour than traditional data warehousing queries. As Snowflake’s product mix shifts toward these higher-value workloads, the company’s gross and operating margins should benefit without requiring proportional increases in infrastructure spending.

Where Snowflake fits in the broader landscape

HSBC isn’t the only bank warming up to Snowflake’s AI story. Bank of America raised its own price target to $205 on May 19, roughly ten days before HSBC’s more aggressive call.

Snowflake operates in the cloud data platform space alongside competitors like Databricks, Google BigQuery, and Amazon Redshift. The strong earnings report wasn’t just about top-line growth. It showed that Snowflake is getting better at converting revenue into profit, a maturation signal that growth-stage tech investors pay close attention to.

What this means for investors

The gap between HSBC’s $289 target and the prior $176 target is unusually large for a single revision. That kind of move typically reflects a fundamental reassessment of a company’s earnings power, not just a minor model tweak.

The consensus target of approximately $283 suggests most analysts are broadly aligned with HSBC’s optimism, even if the bank is slightly more aggressive.

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