Snowflake's GenAI Initiatives Drive Investor Interest: Analyst Sees Strong Revenue Growth Ahead
Needham analyst Mike Cikos reiterated Snowflake Inc (NYSE:SNOW) with a Buy rating and a $210 price target.
Snowflake has garnered investor attention in the last month based on the company’s GenAI initiatives, Cikos noted.
While the company first unveiled Cortex in November 2023, the recent focus on Snowflake’s GenAI roadmap results from the launch of Arctic in April, the upcoming Analyst Day at Snowflake Summit in San Francisco, and investors determining the direction of the company under new CEO Sridhar Ramaswamy.
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The Arctic is Snowflake’s family of Enterprise-grade models.
Cikos noted that the Arctic (and Cortex, more generally) will play a prominent role.
The analyst published his Arctic Primer to highlight his research on the offering, which is consistent with his other primers.
Snowflake has taken an open approach to the Arctic by delivering its models under the Apache v2.0 license.
Cikos noted that this transparency serves Snowflake well by allowing customers to tinker with the models, which instills trust. Furthermore, Snowflake has architected each model under the Arctic umbrella with an efficiency mindset.
A critical component to driving adoption is removing latency to serve enterprise use cases while improving TCO. Cikos added that pricing demonstrates the nascency of the different models concerning monetization.
Arctic is one of the multiple features on the Snowflake product roadmap that will encourage customers to consume more, thereby generating stronger revenues for the company.
Also, the number and timing of new product announcements at Snowflake bolsters the case for solid R&D innovation to support long-term durable growth and competitive positioning, as per Cikos.
Snowflake stock has lost over 6% in the last 12 months. Investors can gain exposure to the stock via the TrueShares Technology, AI & Deep Learning ETF (NYSE:LRNZ) and the Global X Cloud Computing ETF (NASDAQ:CLOU).
Price Action: SNOW shares are trading lower by 1.21% to $148.92 at the last check on Wednesday.
Also Read: Snowflake Q1 Earnings: Revenue Beat, EPS Miss, ‘Strong Customer Interest’ For AI Products And More
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