Group 1 - The article discusses an update on the investment thesis for Snowflake (SNOW) as a new earnings release approaches, highlighting a previous sharp sell-off in the stock after the last earnings report [1] - The author emphasizes a strong buy recommendation for Snowflake, indicating confidence in the company's potential despite recent market volatility [1] - The author's background in IT and experience in managing a family portfolio for seven years contribute to a deep understanding of risk and reward in technology stocks [1] Group 2 - The article aims to provide clear and accessible insights for investors of all experience levels, focusing on technology stocks while also exploring diverse sectors for promising investment opportunities [1] - The author invites collaboration and exploration within the investor community to uncover market secrets and achieve financial success [1]

Core Viewpoint - Snowflake is set to report its Q1 earnings on May 21, with analysts predicting a 57.1% year-over-year increase in EPS to $0.22 and a 21.1% increase in revenue to $1 billion [1] Group 1: Financial Performance and Analyst Predictions - Snowflake's stock has rebounded over 40% since the low point after the tariff "liberation day," benefiting from easing global trade tensions [1] - Analysts maintain a bullish outlook, with most rating the stock as "buy" and expecting continued strong growth [1] - Mizuho analyst Gregg Moskowitz raised the target price from $190 to $205, citing strong industry growth and potential for further stock price appreciation [1][2] Group 2: Competitive Landscape and Concerns - Despite the positive outlook, concerns have been raised about Snowflake's business execution and competitive pressures, with a top investor warning that current valuations may not be sustainable [2][3] - The investor highlighted a decline in net revenue retention and the risk of reduced contract renewals due to a less attractive usage-based revenue model [3] - Major cloud competitors like Microsoft, Amazon AWS, and Google are increasingly encroaching on Snowflake's market share, raising concerns about its competitive position [3] Group 3: Market Sentiment - Overall, Wall Street remains optimistic, with a consensus of 32 "buy" and 6 "hold" ratings, indicating a strong buy sentiment [3] - The 12-month target price of $203.69 suggests potential for double-digit upside [3]

Group 1 - The account is managed by Noah's Arc Capital Management, focusing on providing Wall Street-level insights to main street investors [1] - The research primarily targets 20th-century stocks undergoing transformation in the 21st century, while also covering companies that facilitate these transformations [1] - The emphasis is on identifying innovations in business models that could lead to significant stock price changes [1] Group 2 - Noah Cox is the managing partner of Noah's Arc Capital Management, and his views may not necessarily reflect those of the firm [3] - The content is intended solely for informational purposes and does not constitute investment advice [3]

Group 1 - Snowflake Inc. (SNOW) is expected to report quarterly earnings of $0.22 per share, a 57.1% increase year-over-year, with revenues projected at $1 billion, reflecting a 21.1% year-over-year growth [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating analysts have collectively reassessed their initial estimates [1] - Analysts predict 'Revenue- Product revenue' will reach $934.50 million, showing an 18.4% year-over-year increase [3] Group 2 - 'Revenue- Professional services and other revenue' is forecasted to be $44.56 million, representing a 13.9% increase from the prior-year quarter [4] - 'Remaining performance obligations' are expected to reach $6.55 billion, up from $5 billion in the same quarter last year [4] - The total number of customers is projected to be 11,485, compared to 9,822 a year ago [4] Group 3 - The number of 'Customers with trailing 12-month product revenue greater than $1 million' is expected to be 603, an increase from 485 in the same quarter last year [5] - The consensus estimate for 'GAAP Product gross profit' is $678.55 million, compared to $569.93 million in the same quarter of the previous year [5] - Over the past month, shares of Snowflake have increased by 27.6%, outperforming the Zacks S&P 500 composite's 9.8% change [5]

Core Viewpoint - Snowflake (SNOW) and Datadog (DDOG) are significant players in the cloud computing sector, focusing on data analytics and observability solutions, respectively [1][2]. Industry Overview - The global cloud computing market was valued at $752.44 billion in 2024 and is projected to grow at a CAGR of 20.4% from 2025 to 2030, presenting substantial growth opportunities for both SNOW and DDOG [2]. Snowflake (SNOW) Analysis - SNOW has a net revenue retention rate of 126% as of January 31, 2025, indicating strong platform adoption and usage [3]. - The number of customers generating over $1 million in revenue increased from 455 to 580 between January 31, 2024, and January 31, 2025 [3]. - SNOW's customer base grew from 9,384 to 11,159 in the same period, with 745 customers from the Forbes Global 2000 contributing to 45% of its fiscal 2025 revenues of $3.6 billion, a 29% increase from fiscal 2024 [4]. - In April 2025, SNOW enhanced its AI Data Cloud by integrating capabilities with Apache Iceberg tables, improving query performance and data sharing [5]. - SNOW expanded its AI Data Cloud with automotive-specific solutions in May 2025, driving digital transformation and AI innovation [6]. Datadog (DDOG) Analysis - DDOG reported 3,770 customers with an annual run rate (ARR) of $100,000 or more in Q1 2025, up from approximately 3,340 in the previous year, accounting for 88% of total ARR [7]. - New products like Flex Logs and Database Monitoring quickly achieved $50 million in ARR in Q1 2025, indicating strong demand for advanced log management [8]. - DDOG's acquisitions, including Eppo and Metaplane, are enhancing its product offerings and capabilities in observability and data quality [9][10]. Performance Comparison - Year-to-date, SNOW shares have increased by 18.2%, while DDOG shares have decreased by 17.6%, attributed to macroeconomic challenges and rising expenses for DDOG [11]. - Both companies are currently considered overvalued, with SNOW trading at a forward Price/Sales ratio of 12.71X compared to DDOG's 11.89X [14]. Earnings Estimates - The Zacks Consensus Estimate for SNOW's fiscal 2026 earnings is $1.15 per share, reflecting a 38.55% year-over-year increase [16]. - The Zacks Consensus Estimate for DDOG's 2025 earnings is $1.69 per share, indicating a 7.14% year-over-year decrease [16]. Conclusion - Both SNOW and DDOG present strong growth prospects in the cloud market, but SNOW's robust portfolio and client base make it more attractive for long-term investors, while DDOG faces margin pressures and slower earnings growth [17].

Core Insights - Snowflake Inc.'s stock is currently approximately 3% lower than its price on February 6, indicating short-term volatility [1] - The analysis emphasizes the importance of focusing on high-quality companies with reasonable valuations rather than seeking deep discounts [1] Company Analysis - The investor's approach combines hands-on experience with an academic background in corporate finance, highlighting a focus on long-duration growth opportunities [1] - The analysis prioritizes fundamental business and strategic perspectives, alongside financial performance and intrinsic value assessment [1] - The investor advocates for a balanced portfolio that includes both growth opportunities and low-volatility dividend-paying stocks [1] Investment Philosophy - The investor seeks high-quality names that have the potential for exponential share price growth over the long term, rather than only established companies [1] - There is a caution against investing in excessively cheap stocks, as they may have underlying issues that warrant avoidance [1]

Market Capitalization Changes - Tesla's market capitalization increased by 6.75% to $1,025.4 billion [3] - TSMC's market capitalization rose by 5.93% to $969.7 billion [3] - Tencent's market capitalization grew by 4.66% to $609.8 billion [3] - Netflix's market capitalization decreased by 2.65% to $472.3 billion [3] - Oracle's market capitalization increased by 4.58% to $440.8 billion [3] Notable Performers - Shopify saw a significant increase of 13.7% in market capitalization, reaching $136.2 billion [4] - AppLovin experienced a remarkable rise of 89% to $1.177 billion [4] - AMD's market capitalization increased by 5.13% to $175.3 billion [5] - Uber's market capitalization rose by 6.39% to $184.2 billion [5] Decliners - Pinduoduo's market capitalization fell by 6.14% to $165.2 billion [4] - Xiaomi's market capitalization decreased by 2.11% to $163.4 billion [4] - Spotify's market capitalization declined by 4.23% to $127.3 billion [4] Other Companies of Interest - Adobe's market capitalization increased by 3.3% to $168.7 billion [4] - Qualcomm's market capitalization rose by 4.78% to $167.0 billion [4] - Intel's market capitalization increased by 3.55% to $96.7 billion [5] - Airbnb's market capitalization grew by 5.64% to $828 million [5]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies covered. Core Insights - The report highlights the global distribution of enterprise software spending, indicating that the US accounts for approximately 56% of sales, with Western Europe at 23% in CY24, showing minimal change from CY20 [15] - The exposure of software and cloud companies to China is relatively low, with the report suggesting that tariffs or actions on software will not have a significant impact [14][12] - The report expresses concerns about deglobalization, noting that regions like the EU may attempt to promote local software industries through regulations and tariffs [14][12] Summary by Sections Global Exposure of Enterprise Software - Enterprise software spending has remained stable globally from CY20 to CY24, with most companies generating more revenue outside North America [2] - The US market is the largest revenue driver for most companies, except for SAP, which has similar revenue exposure in Western Europe and North America [14][12] Microsoft and Oracle Exposure - Microsoft has a 22% exposure to Western Europe and 11% to Asia/Pacific, with China accounting for only 1.8% of Azure revenue [22][28] - Oracle's global exposure mirrors that of enterprise software, with 21% in Western Europe and 10% in Asia/Pacific [33][35] SAP and Adobe Global Presence - SAP has equal revenue exposure to the US and Western Europe, with 37% in North America and 37% in Western Europe [40][41] - Adobe has become more global over the past four years, with a revenue mix of 56% in North America and 23% in Western Europe by CY24 [42][45] Salesforce and Workday International Growth - Salesforce has increased its international revenue percentage from CY20 to CY24, now at 64% in North America and 20% in Western Europe [46][48] - Workday remains predominantly North American, generating 77% of its revenue in North America in CY24, although it is working to expand its international presence [51][54]

Core Insights - The demand for artificial intelligence (AI) applications remains strong despite macroeconomic uncertainties [1] - Companies like Meta Platforms and Microsoft are increasing their investments in AI infrastructure and solutions [2] - Snowflake is expected to report solid results due to its growing AI offerings and customer adoption [3] Company Performance - Snowflake's AI solutions are gaining traction, with over 4,000 customers using its AI and machine learning technology weekly [5] - The company's remaining performance obligations (RPO) increased by 33% year-over-year to $6.9 billion, indicating a strong revenue pipeline [6] - Snowflake's customer base grew by nearly 19% year-over-year, with a net revenue retention rate of 126% [7] Market Potential - Snowflake anticipates its total addressable market (TAM) to reach $342 billion by 2028, suggesting significant growth opportunities [8] - The company is projected to achieve a 40% increase in its bottom line in fiscal 2026, with sustained earnings growth rates of over 35% in the coming years [10][12] Investment Outlook - Snowflake's stock has a median price target of $201, indicating a potential 20% increase in the next year [9] - The upcoming earnings report is expected to bolster investor confidence, potentially leading to further stock price gains [13]

Core Viewpoint - Snowflake (SNOW) is considered to be significantly overvalued based on reverse DCF analysis, indicating a potential mispricing in the market [1]. Group 1: Company Analysis - Companies that are secularly enabled with a history of strong execution and optimized capital allocation are rare to find at fair or below fair value [1]. - Long-term investors in Snowflake may face challenges due to its current valuation [1]. Group 2: Investment Strategy - The focus is on a buy-and-hold strategy primarily in technology stocks, reflecting a long-term investment approach [1].