Snowflake drops as Bernstein starts coverage, says gaining share will be 'difficult'
Sundry Photography/iStock Editorial via Getty Images

Snowflake (NYSE:SNOW) shares fell nearly 4% on Tuesday as investment firm Bernstein started coverage on the data warehousing company, noting that although it has seen strong growth, it may be difficult to take away business from the entrenched cloud competitors.
Analyst Dr. Mark Moerdler started coverage on Snowflake (SNOW) with a market perform rating and a $166 price target, pointing out that the Frank Slootman-led company has been "one of the darlings" of the cloud world, delivering strong growth and executing well. But financial starts, including the 30% year-over-year growth in fiscal 2029 is already "baked into the stock's valuation" and with it facing competition from the likes of Amazon (AMZN) Web Services, Microsoft (MSFT) Azure and Google (GOOG) (GOOGL) Cloud Platform, it may be difficult to surpass estimates. 
"To meaningfully beat those numbers will require gaining significant revenue and share in new markets competing against strong often entrenched Cloud competitors which we believe is going to be difficult," Moerdler wrote in a note to clients.
The analyst added that Snowflake's (SNOW) technology has a number of use cases and provides an interesting view on the future of data, but growth is slowing as it runs up against the law of large numbers and a "saturating market."
"While the company has been expanding the reach of their product into adjacent markets, we believe these market opportunities are going to be more difficult and take longer to gain share in than many expect," Moerdler added.
Earlier this month, Jefferies said that "winter came quick" for the software space and Snowflake (SNOW) was among the stocks with the most to lose.