AI is expected to reinforce the logic of growth! Truist sings multiple US infrastructure software stocks such as Snowflake (SNOW.US) and MongoDB (MDB.US)
The Zhitong Finance App learned that in the past few months, many infrastructure software stocks have rebounded, partly due to favorable factors related to artificial intelligence (AI), which prompted investment bank Truist to raise target share prices for many companies.
According to reports, Truist raised the target price of Snowflake (SNOW.US) from 300 US dollars to 375 US dollars, raised the target price of MongoDB (MDB.US) from 400 US dollars to 475 US dollars, and maintained the “buy” rating of the two stocks.
A team of Truist analysts led by Miller Jump said in an in-depth investor report released on Thursday: “During the earnings release period, both JFrog (FROG.US) and Datadog (DDOG.US) emphasized that the company's revenue growth rate continues to accelerate, driven by favorable AI factors.” “With the recent sharp rise in stock prices across the sector, we believe that companies with credible AI to accelerate growth will still be most likely to outperform the market in the face of a more severe short-term risk-reward environment.”
The analyst further stated, “Although Snowflake is already a hot target in market consensus, we think there is room for the stock to continue to rise. “Our conversations with customers and partners over the past 90 days have shown that Snowflake is benefiting from the investment cycle of 'getting data ready for AI', while Coco's adoption is accelerating cloud migration projects.”
The analyst added: “While we still believe MongoDB is a long-term AI beneficiary, there is currently little evidence that AI workloads will significantly accelerate their growth this quarter. Therefore, after the recent sharp rise in the share price, we are wary of the potential volatility of the stock.”
Truist also raised the target price for GitLab (GTLB.US) from $30 to $40 and the price target for Atlassian (TEAM.US) from $160 to $185. Despite raising GitLab's target price, Truist maintained a “hold” rating on the stock.
GitLab will release its earnings report on September 1. Market consensus predicts adjusted earnings per share of $0.18 and revenue of US$272.36 million. The analyst stated, “We expect GitLab's performance to meet market consensus expectations. Although the results for the first quarter of FY2027 were solid in terms of fundamentals, we do not believe that this quarter's performance will substantially ease investors' current concerns about the contraction of the pay-per-seat business and the sustainability of core demand trends.” “However, GitLab provided a business update during the quarter, which we believe further clarifies the company's situation and is a positive sign of a potential reversal of the overall business trend.”
Other companies that have received the target price increase include Elastic (ESTC.US). Truist raised the target price from $80 to $100; PagerDuty (PD.US)'s target price was also raised from $11 to $13. Truist maintained a “buy” rating for both stocks.