Snowflake Rides AI Boom to New HeightsDec 04, 2023
Cloud companies are basically printing cash at this point
Snowflake continued their streak of recent success with another massive earnings beat as huge clients keep throwing mountains of cash into the company.
Snowflake is another ascendant mid-cap company that is profiting big off of enabling the AI boom. They generated a strong adjusted $0.27 EPS from $734 million in revenue. This 32% growth from last year is largely being driven by bigger and bigger enterprises trusting SNOW with their data. The number of customers paying Snowflake $1 million or more in a year has risen 52% since 2022, and that rate is accelerating.
More importantly, as Snowflake's cloud systems become more and more efficient, the company is gaining momentum in free cash flow. Snowflake's position in the market is becoming more and more secure as their products get wider adoption and the market learns how to appropriately value what was once the most overbought company in the history of the market.
WHY IT MATTERS
Taking a long look at service providers like Snowflake can help us get a better sense of the actual investment happening behind the scenes as companies build and develop AI services. This time last year, analysts at Moby were really concerned that cloud computing budgets were drying up as enterprises braced for a recession. The race to dominate this new AI market has blown the doors off of infrastructure spending as companies work hard to create systems that are efficient enough to run and leverage LLM products. Snowflake's data-as-a-service model is going to be critical as more AI systems come online and the industry develops further. For now, Snowflake rose over 6% in early trading, nearly putting the company north of 40% growth on the year.