We recently compiled a list of the 11 Trending AI Stocks on Latest News and Ratings. In this article, we are going to take a look at where Snowflake Inc. (NYSE:SNOW) stands against the other AI stocks.
The rise of artificial intelligence (AI) is driving significant growth in the data center market. Analysts predict that the demand for data center capacity to support AI workloads will increase significantly due to factors like growing computing power requirements. The need to process large amounts of data and the growing adoption of AI applications across various industries should accelerate the growth.
Likewise, Fortune Business Insights expects the data center market to grow at a Compound Annual Growth Rate (CAGR) of 25.7% between 2024 and 2032. The growth comes as companies and nations prepare a massive capital deployment of $1.8 trillion from 2024 to 2030 to meet the growing demand for computing power worldwide.
The US is one of the countries spearheading the data center investment spree. As part of the Stargate project, the US is poised to play host to a $500 billion investment into data centers, which is expected to bolster the country’s computing capacity to boost AI development. The first $100 billion investment is expected to come up this year.
The Stargate project is expected to give the US a strategic advantage and create thousands of jobs.
“As for the 100,000 jobs the project is supposed to create? Some construction jobs will be created as the data centers are built, but many more (millions more) will be created as the data centers come online. We’ve never had a compute cloud like this—there’s literally no way to calculate the economic impact of this amount of AI compute. It will be massive,” said Shelly Palmer, a tech pundit and consultant,
Amid the investment spree, there are growing concerns over a potential oversupply of data center capacity despite the ever-growing needs as part of the AI boom. Reports that Microsoft is canceling leases for US data center capacity are raising concerns about whether tech giants have secured more AI computing capacity than they needed. The software giant has already canceled data center leases totaling hundreds of megawatts, signaling it could have more capacity in its pipeline than it needs.
According to the Kyndryl AI Readiness Report, 86% of leaders are confident in their AI implementation, but 36% cite ROI as a barrier to adoption. Data centers, the core of the digital economy, support various demanding workloads, emphasizing the need for low-latency, high-bandwidth environments for AI applications. The time to invest is now.
Our Methodology
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds in Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 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: 85
Snowflake Inc. (NYSE:SNOW) is a software application company that offers a cloud data warehouse platform that allows users to store, analyze, and share data. The company also provides AI powered solutions that simplify unstructured data processing. On February 27, Snowflake moved to deepen its investments in AI innovation with the opening of a Silicon Valley AI hub.
The AI hub will offer solutions that enable developers, startups and business leaders to deepen relationships and shape the future of AI. At a time when the majority of cloud providers continue to operate primarily virtually, the Silicon Valley AI Hub creates a physical hub for AI innovation. This 30,000-square-foot facility accomplishes several strategic goals, including placing the company at the hub of Silicon Valley’s AI talent ecosystem and showcasing its AI capabilities.
Snowflake plans to invest up to $200M in next-gen startups through its AI Data Cloud via the Snowflake Startup Accelerator Program with leading VCs and commits $20M toward AI upskilling, supporting over 4,000 customers with AI/ML capabilities.
Snowflake Inc. (NYSE:SNOW) is presenting itself as a solution to the governance-innovation tradeoff that has impeded enterprise AI adoption by delivering AI capabilities straight to governed data instead of requiring data movement.
“Snowflake is the most consequential data and AI company in the world today,” said Sridhar Ramaswamy, CEO of Snowflake. “Our technology is already at the heart of customers’ data and AI strategies, and now, we are taking it a step further by creating a physical space for people shaping the future of AI to connect, learn, and work.
Overall SNOW ranks 1st on our list of the trending AI stocks. While we acknowledge the potential of SNOW as an investment, 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 more promising than SNOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
