Snowflake (NYSE:SNOW) plans to report its results for the first quarter of fiscal year 2024 (which ended on April 30, 2023) on May 24. So, is this a time to be a buyer, a seller or neither? It’s up to you, but you’ll definitely want to look into Snowflake’s surprising connection to generative artificial intelligence. Ultimately, you may decide to give SNOW stock a try before or after earnings, or even both.
Snowflake is a cloud-based data platform provider that’s based in Montana. The company has deployed its cloud computing services across multiple industries, including the manufacturing sector.
You just never know where Snowflake might apply its cloud prowess next. Could there be an AI angle in the works? Maybe so – and as Snowflake gears up to deliver a slew of quarterly data points, now’s a great time to assess the company’s value proposition for prospective investors.
Richly Valued SNOW Stock Still Poised for Growth
The old value-versus-growth debate is never-ending, it seems. Snowflake serves as an instructive example, as SNOW stock may appear to be over-valued according to some metrics. Here’s how Snowflake measures up to the sector median:
- Non-GAAP forward price-to-earnings (P/E) ratio of 290.16x, versus sector median of 19.84x
- Trailing price-to-book (P/E) ratio of 10.19x, versus sector media of 2.81x
- Trailing price-to-sales (P/S) ratio of 26.55x, versus sector media of 2.68x
That’s not the full picture, though. Seemingly lofty valuations can sometimes be justified if a company’s likely to grow over the coming quarters. As for Snowflake, analysts expect the company’s revenue to grow by 39.45% this year on a trailing 12-month basis, followed by 37.22% in 2024 and then 32.81% in 2025.
Furthermore, Snowflake has a consistent track record of beating analysts’ quarterly EPS forecasts. Analysts only expect Snowflake to post EPS of 6 cents for the soon-to-be-reported quarter. So, it’s not inconceivable that the company will exceed this consensus call.
Snowflake Can Benefit From Generative AI Trend
As you’re surely aware, generative AI is a red-hot topic in 2023. Yet, you might never have considered cloud company Snowflake as a notable player in the AI trend.
However, per Seeking Alpha, Stifel analyst Brad Reback envisions Snowflake as a potential “net beneficiary” of the generative AI market’s growth. That’s because Snowflake’s “cloud platform has the data used to train large language models” that can be utilized by generative AI applications.
According to Redback, this generative AI connection represents an attractive opportunity for the company, which can avoid paying AI Generative model compute costs. At the same time, he said, Snowflake can monetize customers training their models using information already in the Snowflake data cloud.
So, Snowflake could provide unexpected exposure in your portfolio to the generative AI industry’s future growth. Hence, SNOW stock may be a worthy buy-and-hold irrespective of Snowflake’s near-term earnings results.
SNOW May Be Worth a Try Around Earnings
Because Snowflake has an AI angle, you might be interested in starting a share position in the company before the May 24 earnings event. Then, you could just hold your shares for the long term.
You might prefer to be more cautious. In that case, it’s fine to consider taking a position in SNOW stock after Snowflake releases its quarterly earnings data.
Another approach would be to scale into your position, making small purchases before and after May 24. Either way, Snowflake is at least worth a look. This is especially true especially if you’re interested in indirect exposure to the generative AI market.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.