4. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders as of Q2: 69
Analyst Upside as of October 10, 2024: 36.46%
Snowflake Inc (NYSE:SNOW) stands out as one of the most promising future stocks, according to analysts, as it provides a cloud-based data platform to various organizations worldwide. Its platform offers Data Cloud, enabling customers to consolidate data into a single source of truth, build data-driven applications, and share data and products.
To fulfill customer demand for new product features, Snowflake Inc (NYSE:SNOW) has been renting GPUs, indicating that AI offerings are gaining traction. With the help of large language models (LLMs), Snowflake’s clients can create AI applications and implement them in the safe setting of its data cloud platform.
While the stock has been under pressure in recent months, Snowflake Inc (NYSE:SNOW) has continued to fire on all fronts, depicting an average growth rate of 70% backed by its cloud data warehousing business. The underlying growth figures appear to be sound:
Snowflake’s customer base increased by 21% from the previous quarter, and the company continues to boast a 127% revenue retention rate among current clients. Revenue growth doesn’t appear to be slowing down all that much from where it is now. The long-term potential is enormous in the meantime. By the end of 2028, management predicts its addressable market will have grown from $153 billion last year to $342 billion.
Snowflake Inc (NYSE:SNOW) has enough potential for investors to consider the stock at a valuation that finally gives it a chance to shine because of its strong revenue retention and enormous market opportunity. Consequently, analysts rate the stock as a buy with an average price target of $169.25, implying a 36.46% upside potential.
Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform that is predominantly used for data analytics. The stock declined 16.4% as investors evaluated the impact of a recently announced CEO transition, an investment cycle driven by spend on AI, a cybersecurity incident, and a rapidly changing competitive environment. With GenAI capturing a larger portion of the public discourse, Snowflake’s positioning in the future data stack is under scrutiny by both investors and customers. We believe Sridhar Ramaswamy, the newly appointed CEO, can help the business more efficiently transition toward an AI-first world. While Databricks and other key competitors are presenting strong results, we believe Snowflake’s brand, existing customer base, and accelerating product innovation should allow it to continue to capture share in a relatively large and strategic market. Management continues to describe strong demand trends for its core data analytics, which is also demonstrated by the relatively healthy expansion rates among existing customers while new go-to-market initiatives can help grow the customer base further. Longer term, we remain excited about the Snowflake’s strategic opportunity as the data platform for its customers.”
