Snowflake (NYSE:SNOW)
In pre-market trading on Monday, shares of data warehousing business Snowflake (NYSE:SNOW) increased by more than 3.5% after the investment firm Stifel upgraded the company. Investors are hopeful that recent remarks from other cloud computing firms may herald an end to the slump in the industry.
Analyst Brad Reback upgraded the Snowflake stock from a hold rating to a buy rating, noting that recent commentary from companies such as Microsoft, Datadog, JFrog, and Confluent may indicate that the optimization headwinds are starting to slow. Additionally, Reback pointed out that with easier comparisons in the second half of the year, revenue growth may stabilize around the high 30% range.
Additionally, the business’s discipline should help improve margins and free cash flow “meaningfully higher.”
According to Reback’s hypotheses, Snowflake will most likely be a “net beneficiary” of the expansion of the market for generative AI since its cloud platform has the data that is used in the training of huge language models.
In an investor note, Reback stated, “We believe this represents a very attractive opportunity for Snowflake, as Snowflake can avoid paying to compute costs associated with developing the models, but can use data already in the Snowflake data cloud to monetize customers training their models.” “We believe this represents a very attractive opportunity for Snowflake, as Snowflake can avoid paying to compute costs associated with developing the models,”
In addition, Reback said that current Snowflake stock customers purchased shorter-term contracts during the fourth quarter. Although this trend is expected to continue, it does not alter consumption habits and hence has no effect on revenue.
Featured Image: Megapixl
