Shares of Snowflake Inc. (SNOW) are soaring 5.01% in Tuesday's trading session after Morgan Stanley assumed coverage of the cloud data platform company with an "Overweight" rating and a $262 price target, implying a 23% upside from the previous close.

Morgan Stanley analyst Sanjit Singh expressed confidence in Snowflake's growth prospects under the leadership of new CEO Sridhar Ramaswamy, who took the helm in February 2024. Singh noted that Snowflake "has become a better executing and faster innovating company" under Ramaswamy's tenure, with stabilized product revenue growth in the high 20s.

The analyst highlighted Snowflake's strong positioning in artificial intelligence (AI) as a key driver for future growth. Singh believes the company can achieve its target of a $100 million AI run rate by year-end, potentially contributing significantly to revenues in 2027 and beyond. Morgan Stanley sees AI creating a "long growth runway" for Snowflake's core business while market expansion into data engineering and AI provides a path to over 20% compound annual growth rate through 2030.

Today's surge adds to Snowflake's impressive performance, with the stock up 43% year-to-date and 78% over the past 12 months, significantly outpacing the S&P 500 index. Investors appear optimistic about Snowflake's ability to capitalize on the growing enterprise demand for AI solutions and its potential to increase productivity and cut costs for businesses.