Analysts at Jefferies Financial Group Inc. have suggested that data warehouse software leader Snowflake (NYSE: SNOW) could see its shares undergo a "re-rating" following a new funding round for its rival Databricks, which valued the company at $188 billion. The firm has reaffirmed its "Buy" rating on Snowflake and raised its price target from $300 to $310, representing a potential 14% gain from current levels.
It has been reported that Databricks is raising a new round of funding led by Coatue Management. This funding round values the company at $188 billion, marking a 40% increase from its $134 billion valuation in its previous round in December 2025. The financing is expected to be finalized by late summer.
In a research note, Jefferies analyst Brent Thill stated, "This funding round did not include updated financial disclosures, but looking back to mid-June, Databricks projected its annualized revenue for the first half of fiscal 2027 could surpass $6.9 billion, representing growth of approximately 80% year-over-year. This compares to our prior estimate for Snowflake's annualized revenue of about $5.5 billion for the same period, reflecting 32% growth."
The analyst added, "Our scenario analysis indicates that, at the current valuation, Databricks' projected price-to-sales ratio for fiscal 2028 is approximately 14-20x. Assuming a 65% compound annual growth rate for Databricks from fiscal 2026 to 2028, the $188 billion valuation implies a P/S multiple of about 17x for fiscal 2028. Snowflake is currently trading at 13x its projected fiscal 2028 revenue, with an enterprise value of $100 billion. We believe Snowflake will benefit from this valuation effect; even at a discounted multiple of 15x, its share price could reach $310, implying an enterprise value of around $115 billion."
The AI Data Platform Sector's Rising Tide
Databricks and Snowflake are major competitors in the data analytics space. Databricks, which started as a data platform, has successfully transformed into an artificial intelligence infrastructure provider. The company recently launched products including the Genie AI assistant series, the Lakebase database for AI agents, and the Unity AI Gateway governance tool. Databricks is considered by analysts to be one of the top private tech companies poised for an IPO, following OpenAI and Anthropic.
Databricks CEO Ali Ghodsi recently stated that growing GPU demand was the direct catalyst for the new funding round. He commented in an interview, "Our GPU capacity in Asia is nearly saturated, and demand is growing in many countries including Japan, Korea, the U.S., and India. Therefore, we need to procure a significant amount of additional GPUs, which requires substantial capital. It was this demand that prompted our latest funding round: we have received numerous requests from customers urgently needing more GPU capacity."
Based on this logic, Thill believes a "rising tide lifts all boats" scenario is unfolding for the sector, from which Snowflake stands to benefit. Thill added, "We continue to believe that leading data analytics vendors Databricks and Snowflake are optimally positioned to help enterprises unlock the value of their business data and run analytical workflows faster and more efficiently using AI. We expect overall industry sentiment to remain positive. Both Databricks' Genie and Snowflake's CoCo/CoWork are gaining increasing attention, with early adoption metrics trending upward."
Snowflake's Stock Outperformance and Analyst Sentiment
Snowflake shares have risen 24% year-to-date, standing out against a generally pressured U.S. SaaS sector. The iShares Expanded Tech-Software Sector ETF (IGV), a broad benchmark for the sector, is down more than 13% this year amid concerns about AI disruption.
Strong financial performance has been a key driver of Snowflake's independent rally. Benefiting from robust performance in its core data platform business and a "meaningful lift" from AI tools, Snowflake's first-quarter earnings report surpassed expectations for both revenue and profit. The company also raised its full-year guidance, and coupled with a five-year, $6 billion long-term compute capacity agreement with AWS, its stock surged 37% post-earnings, reversing its year-to-date decline.
According to TipRanks data, Wall Street analysts overall assign Snowflake a "Strong Buy" rating, with an average price target of $301.09, implying an 11% upside from the latest closing price.
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