10 Best SaaS Stocks to Invest In

6) Snowflake Inc. (NYSE:SNOW) 

Number of Hedge Fund Holders: 71

Snowflake Inc. (NYSE:SNOW) is a SaaS business because it delivers cloud-based software that enables companies to store, manage and analyze data.  On 22^nd January, Wedbush analyst Dan Ives reiterated an “Outperform” rating on the company’s shares, increasing the price target to $210. The analyst believes that Snowflake Inc. (NYSE:SNOW)’s product portfolio is expected to see strong demand trends after integrations of AI/ML capabilities.

Elsewhere, Piper Sandler exhibited confidence in the company’s stock as the firm upped its price target to $208 from $185, while maintaining an “Overweight” rating. Brent Bracelin, an analyst at Piper Sandler, mentioned Snowflake Inc. (NYSE:SNOW), Microsoft Corp., and Salesforce, Inc. as top picks to benefit from AI trends by 2025. The analyst opines that these companies are well-placed to take advantage of increasing enterprise investments. Several factors are expected to fuel Snowflake Inc. (NYSE:SNOW)’s growth, which include ongoing migration of data workloads to the cloud, higher adoption of AI technologies, and product portfolio expansion.

The company’s new products and AI initiatives are expected to start contributing more significantly to revenue in fiscal year 2026, which can further fuel growth rates. Baron Funds, an investment management firm, released a Q3 2024 investor letter. Here is what the fund said:

“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform predominantly used for data analytics. Shares fell 15.2% in the third quarter due to a cybersecurity incident, a shifting competitive landscape, a change in leadership, and general macro complexities which are pressuring customer IT budgets. With generative AI (Gen AI) front and center, both investors and customers are closely evaluating Snowflake’s positioning in the future data ecosystem. Databricks and other competitors whose core users are data scientists who are also key buyers of Gen AI technologies, are benefiting. In addition, while Snowflake’s product innovation push should fuel future growth, it may also lead to short-term headwinds to profitability. Management reported healthy demand for its core data analytics, evidenced by solid growth rates among current customers alongside new go-to-market initiatives that could support growth. We are optimistic the new CEO, Sridhar Ramaswamy, can lead the company towards an AI-centric strategy, and therefore remain shareholders.”