Warren Buffett's Berkshire Hathaway Sells Its Snowflake Stock. Don't Follow.

Core Viewpoint - Berkshire Hathaway has exited its position in Snowflake, which may have been a premature move given the company's potential for future growth in the AI sector [1][4][10] Group 1: Berkshire's Investment in Snowflake - Berkshire Hathaway initially purchased Snowflake shares at a pre-IPO price of $120, which was advantageous compared to the debut trading price of around $245 [3] - The average trading price of Snowflake shares in Q2 was $148, with potential selling prices ranging from $125 to $155 depending on the timing of the sale [3] - The decision to sell was influenced by a decline in Snowflake's stock price following disappointing quarterly earnings and the retirement of its CEO [3][4] Group 2: Snowflake's Current Challenges - Snowflake is experiencing slowing growth and is not yet profitable, with a negative profit margin of -38% in Q1 [4][8] - A recent data breach has further eroded investor confidence in the company [4] - The stock has seen a significant decline, dropping about 20% since the quarterly report [3][5] Group 3: Future Potential of Snowflake - Snowflake's software for managing data in a cloud environment is positioned to benefit from the increasing demand for AI, as companies will need substantial data to train their AI models [5][10] - Analysts project Snowflake's revenue could reach approximately $5.3 billion by FY 2027, with the potential for a 20% profit margin translating to around $1.06 billion in profits [8][10] - Current valuation at 14 times sales could suggest a potential value play, despite being considered expensive for most companies [7][10]