From NASDAQ OMX Group:

Snowflake (NYSE: SNOW) stock made gains of 9.4% in Friday’s trading session. It was not driven by any company-specific news, but benefited from strong earnings results published by leading cloud services providers. In particular, Amazon’s better-than-expected fourth-quarter results majorly boosted Snowflake’s share price.

Snowflake is a leading provider of data-warehousing services and related analytics and data management technologies. The company’s Data Cloud platform helps large businesses and organizations combine information generated across Amazon, Microsoft, and Alphabet’s cloud infrastructure services. Strong cloud demand indicators for leading cloud infrastructure providers tend to bode well for Snowflake’s performance.

Amazon’s fourth-quarter report showed its sales grew 14% year over year to $170 billion, significantly exceeding analyst estimates. Sales for Amazon Web Services (AWS) division rose 13% year over year, hitting $24.2 billion. Microsoft also posted strong Q2 revenue of $62.02 billion, up 18% year over year, boosting Snowflake’s outlook.

Snowflake stock trades down roughly 46% from its 2021 peak but shows significant potential growth. At 20 times this year’s expected sales, Snowflake’s highly growth-dependent valuation means the stock may not be a great fit for every investor.

Snowflake is growing rapidly and is expected to continue playing an important role in the evolution of analytics and AI services, making it a potentially worthwhile portfolio addition for risk-tolerant investors. However, the decision to invest in the stock should be weighed against its personal tolerance for volatility.

Before investing in Snowflake, consider that The Motley Fool Stock Advisor team just identified what they believe are the 10 best stocks for investors to buy now, and Snowflake wasn’t one of them. The Stock Advisor service has more than tripled the return of S&P 500 since 2002.

John Mackey, former CEO of Whole Foods Market, and Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned, and The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Snowflake.



Read more: Why Snowflake Stock Soared Today