Whether you're just getting started, a busy professional, or seasoned veteran running a fund of your own, Louis has served folks like yourself throughout his career in equity research and investing. Learn more. Louis created L.A. Stevens Research in which he runs the LAS Index, a basket of stocks chosen via his proprietary method for investing, which has consistently outperformed the indices since its launch. Louis Stevens is a former U.S. Army engineer officer who holds an MBA and a BA in political science ...

Core Insights - Snowflake (SNOW) shares have increased by 5.7% year to date, attributed to a strong portfolio and an expanding partner base, which has been crucial for client growth [1] - As of January 31, 2025, Snowflake had 11,159 customers, up from 9,384 a year earlier, with 745 of these being part of the Forbes Global 2000, contributing to 45% of fiscal 2025 revenues of $3.6 billion, a 29% increase from fiscal 2024 [1] Customer Growth and Retention - The company has a net revenue retention rate of 126% as of January 31, 2025, indicating strong customer loyalty and increased spending [2] - The number of customers generating over $1 million in trailing 12-month product revenue rose from 455 to 580 between January 31, 2024, and January 31, 2025 [2] Product Innovation - Snowflake has introduced over 400 new product capabilities in fiscal 2025, more than double the previous year's launches, with over 4,000 customers utilizing its AI and machine learning technologies weekly [3] Strategic Partnerships - The company has established a robust partner ecosystem, including major players like Amazon, Microsoft, and NVIDIA, which enhances its market position [10] - A partnership with Microsoft has led to the creation of a Snowflake Power Platform connector, facilitating data interoperability between Microsoft's services and Snowflake's AI Data Cloud [11] Acquisitions - The acquisition of Datavolo enhances Snowflake's platform by improving support for structured and unstructured data and simplifying data engineering tasks [12] - The buyout of Night Shift strengthens Snowflake's presence in the federal sector [12] Financial Guidance - For Q1 of fiscal 2026, Snowflake anticipates product revenues between $955 million and $960 million, reflecting a year-over-year growth of 21-22% [13] - The Zacks Consensus Estimate for fiscal 2026 revenues is $4.46 billion, indicating a year-over-year growth of 23.11% [15] Valuation Concerns - Snowflake's shares are considered overvalued, with a Price/Sales ratio of 11.69X compared to the industry average of 5.08X [6] - The stock is currently trading below the 50-day moving average, suggesting a bearish trend [19][20]

Core Insights - Data serves as the foundation for artificial intelligence, which positively impacts Snowflake (SNOW) stock investors [1] Company Summary - Snowflake is positioned favorably in the market due to its role in providing data solutions that support artificial intelligence applications [1]

Financial Performance - Revenue for the fiscal year ended January 31, 2025, was $3.6 billion, up from $2.8 billion in 2024 and $2.1 billion in 2023, indicating a significant growth trajectory[70]. - The company reported net losses of $1.3 billion, $838 million, and $797.5 million for the fiscal years ended January 31, 2025, 2024, and 2023, respectively, with an accumulated deficit of $7.3 billion as of January 31, 2025[75]. - The company anticipates fluctuations in financial results, making future projections challenging, which could lead to a decline in stock price if expectations are not met[103]. - Stock-based compensation represented 41% of revenue for fiscal 2025 and 42% for fiscal 2024, with expectations for substantial ongoing stock-based compensation[124]. - The company's total revenue for the year ended January 31, 2025, was $3.6 billion, with a significant portion recognized under capacity arrangements[401]. Employee and Management - The company had 7,834 employees operating across 34 countries as of January 31, 2025, with no employees represented by a labor union[57]. - Recent executive changes include the retirement of the CEO and CFO, which may impact operational continuity and business strategy execution[122]. - The ability to attract and retain key management personnel is critical for the company's growth prospects[121]. Competition and Market Position - The company has experienced a slowdown in revenue growth due to increased competition and changing technology, which may impact future performance[71]. - Competition may negatively impact customer acquisition and retention, leading to potential harm to business and financial condition[81]. - The company is investing significantly in AI Technology, including internal development and acquisitions, to maintain competitive advantage[86]. - The company operates primarily on public cloud infrastructure provided by AWS, Azure, and GCP, which also represent significant competition[79]. - The company recognizes revenue based on customer consumption rather than a subscription model, leading to less visibility into future revenue recognition[73]. Cybersecurity and Compliance - Cybersecurity threats are prevalent, and any breaches could harm reputation and customer demand, leading to significant liabilities[87]. - The company operates under a shared responsibility cybersecurity model, where customers must implement adequate security controls[91]. - Recent cybersecurity incidents involving customer accounts have led to lawsuits and regulatory inquiries, impacting reputation and resources[96]. - The company faces risks related to compliance with various governmental regulations, which could materially impact its business in future periods[67]. - Compliance with stringent data privacy laws, such as the EU's GDPR and the U.K. GDPR, could result in fines of up to €20 million or 4% of worldwide annual revenue for violations[175]. Strategic Investments and Growth - The company intends to invest significantly in research and development, particularly in data science, artificial intelligence, and machine learning, to drive future growth[75]. - The company is investing in new features and AI technology, which may impact consumption patterns and operational costs[106]. - The company has acquired several firms since the beginning of fiscal 2024, including Samooha, Inc. and Neeva Inc., to enhance its technology and growth opportunities[137]. - The company is focusing on expanding its presence in heavily regulated industries, which may require additional compliance investments[120]. - The company plans to invest substantial time and resources to expand international operations, which may involve significant management attention and financial resources[148]. Financial Risks and Liabilities - The company may require additional capital to support growth, which might not be available on favorable terms[154]. - Servicing substantial debt may strain cash flow, impacting the ability to make scheduled payments[155]. - The company may face increased tax liabilities due to changes in international tax laws and regulations, including the OECD's BEPS project[195]. - The company is subject to significant costs associated with being a public company, which may divert management's focus from revenue-generating activities[217]. - The company may experience volatility in its stock price due to various market factors, including economic conditions and technology sector fluctuations[204]. Intellectual Property and Legal Matters - The company holds over 900 issued U.S. patents and has more than 400 U.S. patent applications pending, along with over 200 issued patents in foreign jurisdictions as of January 31, 2025[63]. - The company's patent portfolio is relatively undeveloped compared to larger competitors, which may limit its ability to counter claims or negotiate settlements in intellectual property disputes[165]. - The evolving legal landscape surrounding AI Technology may expose the company to increased regulatory scrutiny and potential liability, impacting its operations and competitive position[177]. - The company risks significant legal expenses and operational disruptions if it fails to comply with open-source software licensing terms[169]. - The company is currently involved in a securities class action lawsuit, which could result in substantial expenses[204].

Group 1: Software Stocks Overview - Analysts are increasing targets for leading software stocks, indicating significant gains for companies like Snowflake, Okta, CrowdStrike, Workday, and Zscaler [1] - The overall sentiment is firming, with rising price targets providing a strong tailwind for these markets [1] Group 2: Snowflake - Snowflake is the most upgraded stock in March, receiving 21 updates from 39 analysts, raising the consensus price target to $205, representing a 30% gain from late-March levels [2][3] - The company's strong performance is attributed to top and bottom-line outperformance, sustained double-digit growth, and better-than-expected guidance [2] - New products and capabilities, including a deal with Microsoft to deploy OpenAI models, are driving results [3] Group 3: Okta - Okta is the second most upgraded stock in March, with 20 revisions lifting the price target to $115, nearly a 10% increase since the CQ4 2024 earnings report [7][8] - Analysts suggest a potential rise of 20% for Okta, supported by AI's dual tailwind, enhancing capabilities and driving demand [8] Group 4: CrowdStrike - CrowdStrike's Q4 performance was overshadowed by less-than-expected guidance, but analysts view the guidance as conservative, expecting sustained high double-digit growth [9][10] - Client growth and high-module adoption rates among large clients provide business leverage, leading analysts to reset expectations [11] Group 5: Workday - Workday's Q4 results show top and bottom-line strength, leading to a rising price target with a consensus indicating a 20% upside [12][13] - Analysts noted improving business trends and a clearer path to achieving a 30% margin, with a consensus rating of Moderate Buy from 31 analysts [13] Group 6: Zscaler - Zscaler received 10 updates from 32 analysts, with a consensus price target forecasting a 15% upside, and improvements in guidance noted as above-consensus [16][17] - The company is recognized for its healthy results and signs of diversification and upsell capability [17]

Core Insights - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Group 1 - The analysis is intended solely for informational purposes and should not be interpreted as professional investment advice [3]. - There is a clear disclaimer regarding the lack of any stock, option, or derivative positions in the companies mentioned, indicating a neutral stance [2]. - The article expresses the author's personal opinions and does not reflect any business relationships with the companies discussed [2]. Group 2 - The content underscores that past performance does not guarantee future results, which is a critical consideration for investors [4]. - It is noted that the views expressed may not represent the overall stance of the platform, indicating a diversity of opinions among analysts [4]. - The article clarifies that the analysts involved may not be licensed or certified, which could impact the credibility of the analysis [4].

Group 1: AI Market Overview - Artificial intelligence (AI) has been a dominant narrative in financial markets for the past two years, yet pure-play AI stocks have not performed well since the start of the year due to many leading companies being private [1] - Nvidia has seen significant growth due to its advanced GPUs, while Vistra Corp has been a top performer in the S&P 500 in 2024, benefiting from increased data center demand [2] Group 2: SoundHound AI (NASDAQ: SOUN) - SoundHound AI has established a strong first-mover advantage in voice AI solutions, achieving an all-time high (ATH) price of $24.23 in late December, but has since experienced a significant price drop [4] - The company reported Q4 earnings on February 27, with earnings per share (EPS) and revenues exceeding analyst expectations, leading to a 17.48% surge in stock price from $9.21 to $10.82 [5] - Following profit-taking and a delay in filing its annual Form 10-K due to accounting complexities, the stock price fell to $9.40, reflecting a 52.64% loss year-to-date (YTD) [6][7] - Analysts remain optimistic, with a consensus rating of 'Moderate Buy' and an average price target of $15.80, indicating a potential 68% upside from current prices [8] Group 3: Snowflake (NYSE: SNOW) - Snowflake gained attention after its earnings call on February 26, which showed a double beat, although it experienced a 14% sequential reduction in earnings and a minor revenue growth decline [9][10] - The stock price dropped from $166.19 to $154.23 after a brief surge, effectively erasing all YTD gains, with a mere 0.96% increase since the start of the year [11] - Analysts are bullish on Snowflake, with 32 'Buy' ratings and an average price target of $213.06, suggesting a 36.67% upside from current prices [12] - Despite high valuation concerns, some analysts consider Snowflake undervalued based on free cash flow analysis, indicating that patience may be necessary for a more attractive entry point [13]

Core Insights - Warren Buffett's investment strategy focuses on companies with steady growth, reliable profits, and strong management, avoiding trends like AI [2][15] - Berkshire Hathaway sold its entire position in Snowflake after a period of underperformance, despite the stock's subsequent rise [3][12][14] Company Overview - Snowflake is a cloud computing company that enables organizations to aggregate and analyze data effectively [3] - The company launched the Cortex AI platform in late 2023, allowing businesses to utilize large language models for custom AI software [4] Financial Performance - Snowflake generated $3.4 billion in product revenue during fiscal 2025, representing a 30% growth, the slowest since going public [8] - Operating expenses increased by 28.8% to $3.8 billion, leading to a net loss of $1.3 billion, a 53.7% increase from the previous year [8][9] Market Position and Valuation - Snowflake's remaining performance obligations (RPOs) rose by 32.6% year-over-year, indicating strong future demand, but only 48% is expected to convert to revenue in the next year [10] - The stock trades at a price-to-sales ratio of 16.2, making it more expensive than competitors like Microsoft, Alphabet, and Amazon [14] Investment Perspective - Berkshire's return on Snowflake was around 12.5% over four years, underperforming its historical average of 19.9% [13] - Given the current valuation and growth challenges, it is suggested that investors remain cautious regarding Snowflake stock [17]

Core Insights - Snowflake's stock surged 4.5% following the release of its fiscal 2025 Q4 results, significantly exceeding Wall Street expectations [1] - The company is experiencing strong demand for its data cloud platform, driven by artificial intelligence (AI), leading to optimistic guidance for fiscal 2026 [2][10] Financial Performance - Snowflake reported product revenue growth of 30%, reaching nearly $3.5 billion for fiscal 2025, although earnings fell 15% year over year due to AI infrastructure investments [3] - The company ended fiscal Q4 with remaining performance obligations (RPO) of $6.9 billion, a 33% increase from the previous year, indicating a robust revenue pipeline [7] Customer Engagement - There is a notable increase in customer adoption of Snowflake's AI tools, with 4,000 customers using these tools weekly, reflecting a 25% increase from the previous quarter [5] - The net revenue retention rate was 126%, suggesting that existing customers are increasing their spending, which is expected to positively impact margins [8][9] Market Outlook - Snowflake anticipates an increase in operating margin to 8% in fiscal 2026, following a decline in the previous year, with analysts raising earnings growth expectations [10] - The total addressable market for Snowflake is projected to reach $342 billion by 2028, supporting the potential for sustained earnings growth [11] Investment Consideration - Despite a high forward earnings multiple of 170, Snowflake's improving RPO and customer spending patterns suggest it may justify its valuation in the long term [11][13] - The overall customer base grew by 19% year over year, indicating further potential for revenue improvement [12]

Core Viewpoint - Snowflake's stock has experienced volatility since its IPO, but the company is maturing and still has significant growth potential despite recent challenges [1][2][6]. Company Performance - Snowflake's stock price peaked at $401.89 in November 2021 but has since declined to around $170 due to slowed growth, losses, and rising interest rates [2]. - The company’s product revenue growth has decelerated from over 70% in fiscal 2023 to 38% in fiscal 2024, with a net revenue retention rate dropping from 168% in fiscal 2021 to 131% in fiscal 2024 [5][6]. Market Position - Snowflake differentiates itself by providing cloud-based data warehousing that integrates with multiple cloud platforms, unlike competitors like Amazon and Microsoft that lock customers into their ecosystems [4]. - The company offers flexible consumption-based pricing, which has contributed to its growth post-IPO [4]. Future Growth Prospects - Analysts expect Snowflake's product revenue to rise by 21% to 22% year-over-year in the first quarter of fiscal 2026, with total revenue projected to reach $4.5 billion for the full year [7]. - The anticipated growth in the AI market is expected to drive demand for Snowflake's services as companies increasingly utilize its data warehouses for AI applications [8]. Financial Metrics - Snowflake's adjusted product gross margins have stabilized around 76% to 78%, while adjusted operating margins have fluctuated between 4% and 9% [9][10]. - The company is projected to achieve a 39% growth in adjusted earnings per share in fiscal 2026, with its stock currently trading at 169 times its forward adjusted earnings [11]. Investment Potential - A hypothetical investment of $10,000 in Snowflake, assuming a 15% compound annual growth rate in revenue, could yield significant returns over two decades, potentially turning into $100,000 [12].