We recently published a list of 10 Best AI Stocks to Buy According to Reddit. In this article, we are going to take a look at where Snowflake Inc. (NYSE:SNOW) stands against other best AI stocks to buy according to Reddit.
On December 4, Jay Jacobs, US Head of Thematics and Active Equity ETFs at BlackRock appeared on CNBC and discussed the significant growth potential for ETFs as we approach 2025, particularly in the context of the accelerating AI infrastructure phase. He noted that while AI adoption is still in its early stages, substantial investments, amounting to around $250 billion annually from major tech companies, are being made to enhance data centers and develop advanced chips. This investment is crucial for making AI more integrated into everyday life and business applications.
Jacobs emphasized that the opportunity in AI extends beyond just mega-cap tech stocks; it encompasses a broader value chain that includes semiconductor and software companies. He mentioned specific ETFs like ARTY (an index-based artificial intelligence fund) and BAI (an actively managed fund) that aim to capture this growth. Additionally, he highlighted the increasing importance of cybersecurity as data becomes more valuable, suggesting that companies will invest more in protecting their data assets. This trend is reflected in ETFs such as IHAK, which focuses on cybersecurity firms benefiting from this heightened demand.
Dave Nadig, an ETF expert and Financial Futurist, added insights on how AI will shape ETF investing by pointing to the infrastructure needs that arise from increased energy consumption driven by AI technologies and electric vehicles. He noted that companies involved in power generation and utilities are becoming increasingly relevant as they adapt to rising electricity demands. Both experts agreed on the critical role of physical infrastructure in supporting technological advancements, emphasizing that real-world resources like energy and materials are essential for the ongoing development of AI technologies.
Dan Ives, Global Head of Technology Research at Wedbush Securities, also believes the tech market is set for significant growth driven by advancements in AI. He expects AI software companies to play a key role in this expansion, as he mentioned in a CNBC interview on November 25. We discussed this in our article about the 12 Best Artificial Intelligence Stocks To Invest In Under $10, here’s an excerpt from it:
“…Ives believes that the consumption model in enterprise AI, driven by advancements from major chipmakers, will lead to underestimated growth rates of 15% to 20% for these software companies.
Ives also addressed the impact of bond yields and currency strength on the tech trade, noting that while these factors could present headwinds, they are already factored into market guidance. He expressed confidence in a strong demand perspective that could propel the NASDAQ to 20,000 in the next two years, with aspirations for it to reach 25,000 thereafter…”
Our Methodology
We first sifted through Reddit threads to compile a list of the top AI stocks. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A software engineer at work, surrounded by a wall of computer monitors connected to a ‘Data Cloud’ platform.
Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Snowflake Inc. (NYSE:SNOW) is a leading cloud-based data platform provider that uses AI to enhance its services. It utilizes AI for data management optimization, advanced insights, data security, data engineering automation, and data science capabilities.
With over 1,000 deployed use cases and 3,200 accounts leveraging AI and ML features, the company is solidifying its position as a leader in data and AI. The focus on interoperability and data transformation has proven to be a significant differentiator, with these features generating over $200 million in annual run rate. Partnerships with industry giants like Microsoft and ServiceNow further enhance data interoperability and accelerate application development.
AI is poised to revolutionize data consumption, making structured and unstructured data more interchangeable and influencing areas like business intelligence. The company’s comprehensive product suite, including Cortex AI, a platform that uses AI to provide business insights, automate tasks, and build AI-powered applications, positions it as the preferred data platform for enterprises.
Baron Global Advantage Fund stated the following regarding Snowflake Inc. (NYSE:SNOW) in its Q3 2024 investor letter:
“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.”
Overall, SNOW ranks 1st on our list of best AI stocks to buy according to Reddit. As we acknowledge the growth potential of SNOW, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.