From NASDAQ:

Snowflake (SNOW) is a highly sought-after company specializing in cloud computing and data analytics. Despite a 38% stock increase in 2023, investors remain wary due to high valuation and lack of profitability. However, analysts are optimistic, predicting profitability by fiscal year 2024.

Snowflake’s product revenue has seen significant growth, accounting for 95% of total revenue and reaching $1.93 billion for the nine months ended Oct. 31. The company’s customer count with over $1 million in trailing 12-month product revenue increased to 436 in Q3. The CEO believes new products like Snowflake Cortex and Snowpark Container Services will enable customers to fully leverage AI and machine learning. Snowflake also plans to increase its headcount by hiring 1,000 new employees this fiscal year.

At the end of the quarter, Snowflake had $4.5 billion in cash and generated an adjusted free cash flow of $111 million during the quarter. They expect fourth-quarter product revenue to be between $716 million and $721 million and a potential full-year revenue of around $2.6 billion. Analysts forecast a profit of $0.79 per share for fiscal 2024 and a profit increase of 42% to $1.13 per share in fiscal 2025.

Wall Street rates Snowflake stock a “moderate buy,” with strong quarterly results boosting its share price and narrowly surpassing its mean target price of $204.56. However, its high target price of $250 implies a potential 21.6% gain over the next 12 months.

Snowflake is expected to benefit from the increasing demand for its products as more organizations adopt AI for decision-making, with global public cloud spending projected to reach $1.35 trillion by 2027. Despite its high valuation, Snowflake’s rapid expansion in data analytics and AI provides a compelling risk-reward case for investors.



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