Snowflake falls as BTIG downgrades, cuts estimates ahead of Q2, citing cloud weakness
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Snowflake (NYSE:SNOW) shares fell on Tuesday as investment firm BTIG downgraded the data warehousing company, noting a downtick in recent field checks and the fact that cloud hyperscalers started to decelerate in the second quarter.
Analyst Gray Powell lowered his rating on Snowflake (SNOW) shares to neutral from buy, while pointing out that customer spending intentions are still "solid," but not as good as they were six to twelve months ago and some customers may be looking to shift spending to competitors, such as Databricks, to cut costs.
"This is likely an early-stage trend," Powell wrote in a note to investors, adding, "the difference relative to 6 â12 months ago was notable and makes use more cautious on the name."
Snowflake (SNOW) shares fell nearly 5% to $143.50 in premarket trading. 
He also cut estimates for product revenue in fiscal 2023 and 2024 to $1.88B and $2.76B, down from $1.9B and $2.84B, respectively.
With regards to hyperscalers, Powell pointed out that the cloud infrastructure units of Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG) (GOOGL) all saw a deceleration in growth in the second-quarter for various reasons. It's "likely" that these results have "negative implications" for Snowflake (SNOW), the analyst posited.
Snowflake (SNOW) is scheduled to report second-quarter results on August 24 and analysts estimate the company will lose 2 cents per share on $467.54M in revenue.
Last month, investment firm Baird started coverage on Snowflake (SNOW), calling it a leader in "next-generation data."
Analysts are largely cautious on Snowflake (SNOW). It had an average rating of HOLD from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates SNOW a HOLD.