1. Snowflake Inc (NYSE:SNOW)
Brad Gerstner’s Stake: $1,290,210,277
Snowflake is the biggest holding of Altimeter as of the end of the second quarter.
Jefferies analyst Brent Thill named Snowflake Inc (NYSE:SNOW) as his top AI pick for the back half of 2024 as he expects the stock to benefit from the rising demand in infrastructure and software. Thill believes companies like Snowflake will benefit as companies begin to install and deploy AI software in the POC (proof of concept) stage of the AI cycle.
Snowflake Inc (NYSE:SNOW) is a Cloud-based data warehouse offering data storage and analytics services. The company’s moat lies in its data technologies that let companies analyze and make sense of unstructured data. Amid the generative AI boom, companies are ready to spend a fortune to use huge datasets to their advantage. This would bode well for Snowflake Inc (NYSE:SNOW). The company’s usage-based pricing model also gives it an edge in the market. The company expects the total addressable market for its Cloud data platform to rise to $342 billion by 2028, which is double the market size of 2023.
Baron Fifth Avenue Growth Fund stated the following regarding Snowflake Inc. (NYSE:SNOW) in its Q2 2024 investor letter:
“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.”
While we acknowledge the potential of SNOW, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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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