Snowflake Fuels Big Earnings Growth As SNOW Stock Near Buy Point; Beating AI Leaders Nvidia and Microsoft

Asked to guess which stock ranks No. 1 on the 2023 Fortune Future 50, artificial intelligence powerhouses like Nvidia (NVDA), Microsoft (MSFT) and Alphabet (GOOGL) might come to mind. But data warehousing and AI stock Snowflake (SNOW) is the one that earns that distinction. And after generating 127% earnings growth last quarter, SNOW stock eyes a breakout on the horizon.

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Accepting the honor of topping the Future 50, Snowflake’s senior vice president for AI, Sridhar Ramaswamy, said that “in this new AI era, generative AI and large language models will reshape how we live, work and do business,” in the company’s news release. Ramaswamy further noted that “there is no AI strategy without a data strategy.”

Snowflake’s focus on applying machine learning and AI to its Data Cloud platform fits right into the AI boom like, well, snowflakes in winter. Snowflake’s single platform, Data Cloud simplifies the sharing, collaborating, and monetizing of thousands of data sets, services, and entire data applications.

Compiled in collaboration with consulting firm BCG, the latest annual Fortune Future 50 was compiled after examining over 1,000 publicly traded companies with at least $20 billion in market value or $10 billion in revenue in 2022. In terms of methodology, 30% of a company’s score is based on market potential. The other 70% comes from the firm’s capacity to deliver against that potential.

Other Top 10 Future 50 names include Datadog (DDOG), CrowdStrike (CRWD) and Cloudflare (NET).

Snowflake Stock In Demand Among A+ Funds

After an early rise following its 2020 IPO, Snowflake started to melt down, falling into a multiyear slump.

But rebounding institutional demand, boosted by a sharp turnaround in earnings growth in recent quarters, has SNOW stock closing in on a fresh buy point.

Prior-year quarters showed a loss for Snowflake. But the company posted multiple quarters of triple-digit or better earnings growth in fiscal 2023. On Nov. 29, Snowflake posted earnings of 25 cents a share for the third quarter of fiscal 2024, ended Oct. 31. That marked a 127% year-over-year gain.

Wall Street forecasts 42% gain to earnings of $1.12 per share in fiscal 2025.

In fiscal Q3, Snowflake posted revenue of $732.4 million. Sales growth has slowed for at least eight straight quarters. Still, the AI cloud play floated a revenue gain of 32% in its latest report.

Unlike enterprise software peers Datadog, Salesforce.com (CRM), Workday (WDAY), Shopify (SHOP) and Palantir (PLTR), Snowflake did not make the latest list of new buys by the best mutual funds, which comes out Friday.

But 70 funds with A+ or A rating from IBD have a position in SNOW stock. Plus, a B+ Accumulation/Distribution Rating and 1.3 up/down volume ratio show clear demand for Snowflake shares.

SNOW Stock Takes Aim At A Holiday Breakout

Magnificent Seven stocks Microsoft and Nvidia are testing support. MSFT stock remains in buy range, as NVDA stock bounces off its 50-day moving average. Meanwhile, Google stock has just gapped up in heavy volume, leaping back above that benchmark line.

SNOW stock is also up Thursday, gaining around 1.5% to put it just 3% shy of a breakout. Building on string of five up weeks starting last month, Snowflake is now targeting a 193.94 buy point.

Its relative strength line has shot higher in recent weeks, outpacing the trajectories for NVDA, GOOGL and NVDA.

Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.

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