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- 📈 $SNOW: $900M Quarter - The Next Must-Watch AI Stock?
📈 $SNOW: $900M Quarter - The Next Must-Watch AI Stock?
Snowflake beats biggest revenue estimates yet, adds OpenAI as top customer - Will its enterprise AI strategy and new CEO's vision transform the data giant?
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SNOW: SNOW $170.79
This week we're looking at Snowflake, where interesting changes are happening under CEO Sridhar Ramaswamy, Google's former advertising chief. While the company has always been known for data management, their recent moves in AI have caught Wall Street's attention. Multiple analysts are calling this a potential turning point for Snowflake – let's see why.
Strategic Partnerships and Innovation
Snowflake's recent partnership with Anthropic has brought some attention-grabbing results. They've integrated Anthropic's Claude 3.5 models into their platform, and interestingly, OpenAI has become one of their top 10 customers by revenue. The company's taking a different approach to AI processing than most – instead of relying heavily on cloud computing, they're working on processing AI requests directly on devices. They've also introduced Iceberg, their solution for handling both structured and unstructured data, which Ramaswamy describes as a significant shift in how companies manage their data. To support these initiatives, Snowflake raised $2.3 billion through convertible debt in September 2024, giving them substantial resources to develop these projects further. |  |
Growth and Business Model
The numbers from Q3 show some solid progress. Product revenue reached $900.3 million, their biggest beat so far, and their future commitments (RPO) grew to $5.7 billion, up 55% from last year. What makes Snowflake different is how they charge customers – instead of fixed subscriptions, they use a consumption-based model where customers pay for what they actually use. This seems to be working well, as customers tend to increase their usage over time, shown by their 127% net revenue retention rate. Their relationship with AWS is worth noting – about 84% of their 6,000+ joint customers run their Snowflake workloads on Amazon's cloud platform, showing a strong presence in the AWS ecosystem. |  |
Market Position
The data warehouse market is expected to reach $18.82 billion by 2030, and Snowflake has positioned themselves interestingly here. Unlike many competitors who focus on single cloud platforms, they work across AWS, Google Cloud, and Azure, giving their customers more flexibility. They're facing some strong competition, particularly from Databricks, which recently reached a $62 billion valuation. However, analysts at firms like Oppenheimer seem optimistic about Snowflake's prospects, pointing to their product integration and ease of use as key advantages. The company recently raised their revenue guidance to $3.43 billion for the year, suggesting confidence in their growth trajectory. |  |
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