Core Viewpoint - Morgan Stanley supports Snowflake (SNOW.US), stating that artificial intelligence will open long-term growth paths for its core business, with a target of over 20% compound annual growth rate (CAGR) by 2030 [1] Group 1: Business Growth and Strategy - Under the leadership of CEO Sri Dhar Ramaswamy, Snowflake has improved its long-term growth outlook, becoming a more efficient organization in sales, marketing, and product engineering, resulting in stable product revenue growth rates above 20% [1][2] - Snowflake has identified its positioning and developed a strategy to capitalize on a $300 billion market opportunity, allowing customers to easily apply AI to structured and unstructured data on a secure platform [2] Group 2: Revenue Drivers - The core data warehouse business is expected to remain healthy, with Snowflake being one of the few vendors increasing market share among the top ten data warehouse suppliers for 2024 [3] - Snowflake's data engineering product suite has seen revenue run rates exceed $200 million, with projections indicating an increase from $204 million in FY2025 to $367 million in FY2026, representing an 80% growth rate [4] - The AI product suite is expected to contribute significantly from FY2027 onwards, with large customers already engaging in substantial AI workloads on Snowflake [4] Group 3: Customer Growth and Ecosystem - Snowflake's customer base has grown at a 23% CAGR from Q1 2022 to Q1 2025, with expectations of continued strong growth, particularly in new customer acquisition [5] - The newly appointed Chief Revenue Officer, Mike Gannon, is enhancing relationships with major cloud service providers and has confirmed commitments from three of the top five global system integrators to build a $1 billion business line around Snowflake [6]

Core Viewpoint - Snowflake's stock price has rebounded recently, driven more by market sentiment than fundamentals, with aggressive growth expectations for 2025 that may be difficult to achieve [1][11] Group 1: Competitive Landscape - Databricks is experiencing slower growth despite its larger scale, which may alleviate some competitive concerns for Snowflake [1][4] - Databricks' SQL revenue has grown over 150% year-over-year, raising concerns for Snowflake, which is trying to leverage customer migration savings of over 50% from other vendors [3][4] - Snowflake's competitive position is being challenged by the increasing importance of unstructured data and open data formats, which may weaken its business strength [5][10] Group 2: Financial Performance - Snowflake's fourth-quarter product revenue reached $943 million, a 28% year-over-year increase, with a stable net revenue retention rate of 126% [7] - The company expects fourth-quarter product revenue to be between $955 million and $960 million, reflecting a year-over-year growth of 21-22% [7] - Snowflake's non-GAAP operating margin was approximately 9%, benefiting from operational leverage and cost-cutting measures [8] Group 3: Growth Projections - Snowflake's revenue estimates for fiscal years 2026 to 2034 show a gradual increase, with expected revenue of $4.4 billion in 2026, growing at 23% year-over-year [11] - Despite optimistic long-term growth prospects, expectations for profitability improvement may be overly optimistic, with projected earnings per share of around $10 compared to analysts' expectations of $15 [12] Group 4: Strategic Initiatives - Snowflake is expanding its product offerings and transitioning from a cloud-optimized data warehouse to a broader data platform, driven by efforts in data extraction, engineering, and analytics [5][6] - The company is collaborating with Microsoft and ServiceNow to enhance data interoperability and has recently acquired Datavolo to support structured and unstructured data integration [6][10]