In this article, we will discuss the 5 best cloud computing stocks for 2022. If you want to read our detailed analysis of these stocks, you can go directly to the 12 Best Cloud Computing Stocks For 2022.
5. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Funds: 73
Snowflake Inc. (NYSE:SNOW) is a supplier of data warehousing platforms that leverages cloud technology. The Bozeman, Montana-based organization caters to over 5,400 customers and has 250 petabytes (PB) of data under management. The company’s leading offering is the Data Cloud that allows organizations to collate data and utilize it to obtain meaningful information.
Snowflake Inc. (NYSE:SNOW) reported strong Q3 2021 results that outperformed consensus revenue and EPS estimates. The corporation reported revenue of $334.4 million and a loss per share of 51 cents per share. In comparison, analysts anticipated the company to report revenue of $306.1 million with a loss per share of 61 cents. Furthermore, Snowflake Inc. (NYSE:SNOW) reported a CRPO of $1.8 billion, an increase of 94% from the same quarter last year.
On December 2, Tyler Radke at Citi upgraded the stock from a Neutral to a Buy rating and increased the target price on Snowflake Inc. (NYSE:SNOW) from $299 to $470. The analyst highlighted that the growth of the organization is at an “inflection point” following the “very strong” Q3 2021 results.
In its Q3 2021 investor letter, RiverPark Funds shared its stance on Snowflake Inc. (NYSE:SNOW). Here’s what the investment management firm said:
“Following torrid second-quarter results, Snowflake, a position we initiated in March, was also a top contributor for 3Q. The company reported 103% year-over-year product revenue growth, 169% net revenue retention and a 74% non-GAAP gross margin, up 700 basis points year over year. Management also raised guidance to 92% product revenue growth for the full year.
Snowflake offers cloud-based data storage and analytics, generally termed “data warehouse-as-a-service.” The data warehousing market—created by the massive, growing amount of user, customer, and account data and the need to search and analyze it—has historically stored its data on physical servers located on-premises. Incremental warehouse data capacity and renewals are expected to be stored off-premises on cloud servers, with more than 75% of databases projected to move to the cloud by 2022, resulting in a nearly $100 billion market.
Snowflake provides complex data management and analytical tools for its customers, eliminates the need for users to manage infrastructure, is fully scalable for each customer, and can be run on any of the Amazon, Microsoft, or Google cloud platforms. The company also has a unique, customer-aligned billing model based on usage. With the company’s capital expenditure-light model—Snowflake uses the public cloud for hosting—we expect FCF to grow much faster than revenue growth, which we forecast to grow comfortably more than 50% per year for the next several years. Additionally, we have great confidence in the SNOW management team, which previously had an enormously successful run guiding one of our other core Cloud software
holdings, ServiceNow.”
