1. Snowflake Inc. (NYSE:SNOW)
Altimeter Capital’s Stake Value: $1,661,423,982
Number of Hedge Fund Holders: 73
Snowflake Inc. (NYSE:SNOW) ranks first on our list of the best tech stocks to buy according to Brad Gerstner. Snowflake Inc. (NYSE:SNOW) is a leading data cloud company in the United States. The company has more than 9,822 global customers that use its data storage, processing, and analytics products. Its AI data cloud is used by over 10,000 companies including Adobe, AT&T, HP, Mastercard, PepsiCo, Nielsen, Siemens, Yamaha, and US Foods, to name a few.
The company has been making considerable leaps in AI. It recently launched its enterprise AI to more users by enhancing its Cortex AI and Snowflake ML. The Snowflake Cortex AI is a family of AI features based on large language models (LLMs) capable of understanding unstructured data and providing assistance. Cortex, now widely available, is a customer favorite due to its ease of use and efficiency. The new enterprise AI will unlock advanced chat experiences, allowing organizations to develop chatbots within a few minutes.
Snowflake Inc. (NYSE:SNOW) logged $828.7 million in revenue for Q1 2024. Of this, consumption of its compute, storage, and data transfer products accounted for $790 million, up by 34% year-over-year. The company does not follow a regular subscription pricing model. Instead, the company recognizes revenue based on the contract. Given the contracts are flexible, customers may use more services than initially agreed upon, leading to more sales revenue for Snowflake. Product revenue, therefore, is a direct indication of customer satisfaction levels.
In the week preceding May 22, Cortex AI had over 750 customers. The company expects full-year product revenue to reach $3.3 billion, up 24% year-over-year. The company trained the Arctic, a new large language model, in three months, on a small amount of GPU compute. Snowflake Inc. (NYSE:SNOW) plans to spend more on GPUs in 2024 and hire more people in AI.
Snowflake is Gerstner’s top tech stock pick and accounts for 25.5% of his 13F portfolio. Overall, there were 73 hedge funds long SNOW in Q1 2024 with stakes worth $4.21 billion. Wall Street analysts have a strong buy opinion on Snowflake Inc. (NYSE:SNOW). Based on price targets from 46 analysts, the stock has a median price target of $200, representing an upside of 48%, from its current price of $134.75.
While we acknowledge the potential of tech stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
