Hot review – waiting for the “snowy” report!
Snowflake will release its quarterly results after the close today.
Snowflake (SNOW) is a cloud-based data storage and processing platform. It aggregates information into a single system that allows you to manage your data, integrate it with different programming languages and develop applications.
In 2020 after the IPO, the company's capitalisation was up to $200 billion! Now Snowflake is worth 4 times less, but the platform remains one of the best tools in AI and big data. According to Bloomberg, the AI market could grow to $1.3 trillion in 10 years at an average annual growth rate of 42%.
With the new Snowflake Cortex service, users with any skill set can implement leading AI models. Snowflake has a number of partnerships and products in development, including with NVIDIA and Microsoft Azure.
A high net revenue retention rate (142%) means that existing customers are buying more over time. At the end of the second quarter, Snowflake serves 400 companies with annual revenues of more than $1 million, up 62% year-over-year. 639 of Snowflake's clients are on the Forbes Global 2000 list.
Among the negative factors are potential competition with Databricks, the risk of a recession in the US, and the company's high valuation.
Snowflake's gross profit is growing, but operating profit margins have been stagnant for two years due to R&D investments. In the next couple of years, the company's new products will start to scale and things may improve.
Current prices are already attractive enough to buy with a target price of $250. In addition to the results for the previous quarter, the earnings outlook is important. Wait for the report and then make a decision.
This post is not an investment recommendation. Make decisions based on your own analysis.
