Snowflake (SNOW) Stock

Snowflake (SNOW 0.63%) is not doing well this year. Its stock has dropped 11% in 2024, which is significantly worse than the performance of major market indices.

Snowflake's shares have struggled for most of 2024 due to worries about the company's slowing growth and high valuation. However, its recent quarterly results have brought some optimism back to this struggling tech firm.

After Snowflake Inc. released its FQ3 earnings, its stock price jumped, but it is still considered overvalued due to low AI revenue and slowing growth. The company is expecting only 23% year-over-year growth in FQ4, even with investor enthusiasm. The stock's increase is mainly fueled by excitement around AI and rising valuations, making it comparable to Databricks before its IPO, despite having growth rates that are potentially twice as high.

On Tuesday, Wedbush upgraded the ratings of Snowflake (NYSE:SNOW) and Elastic (NYSE:ESTC) to positive, believing there are chances for more software companies to join the AI trend as new applications develop. The brokerage is optimistic about the next stage of the AI revolution, known as the "enterprise consumption phase," which involves the introduction of large language models (LLMs) for many businesses and increased use of generative AI. They think this will significantly boost the software industry and its main players.

Snowflake (SNOW 2.38%) stock has risen significantly after facing challenges since spring, following the announcement of its earnings for the third quarter of fiscal 2025, which ended on October 31. Despite a sudden change in leadership and concerns about its ability to compete in the growing field of artificial intelligence (AI), the company is successfully attracting both customers and investors once more.

Warren Buffett is the CEO of Berkshire Hathaway. During his 59 years in this role, Berkshire's stock has achieved a compound annual return of 19.8%, which is nearly double the average annual return of the S&P 500 for the same time frame.

Earlier this year, Snowflake's stock faced challenges because of unsatisfactory guidance for FY 2025 and the retirement of CEO Frank Slootman. The new CEO, Sridhar Ramaswamy, brings AI knowledge to help Snowflake reach its ambitious $10 billion revenue target by FY 2029 and compete better with Databricks. While Snowflake Cortex improves data processes using AI, it still needs more advanced features compared to Databricks Mosaic AI, which means more investment in AI is required.

SNOW's stock is benefiting from a growing range of products and a strong network of partners, even though its valuation seems high.

On November 21, Snowflake's (SNOW 2.38%) stock jumped by 33% after the company released its recent earnings report. In the third quarter of fiscal 2025, which concluded on October 31, Snowflake's revenue increased by 28% compared to the previous year, reaching $942.1 million, and it surpassed analysts' predictions by $43.6 million.