Snowflake (NYSE: SNOW) the stock has just come out of a nasty snowfall following its recent quarterly results which coincided with a surprising change of CEO and disappointing advice. Since its 52-week high of $237.72 per share, SNOW stock has lost about 33% of its value. With many AI innovations recently unveiled (and more to come), shares of the severely underappreciated artificial intelligence (AI) stock now appear far too oversold.
Undoubtedly, Snowflake’s last quarter had a lot for investors to digest, perhaps too much to the point that they had severe indigestion. The more flexible guidance justified some sanctions, especially given the height of the multiple at the start of the quarter. That said, I think many investors underestimate the capabilities of its new CEO, Sridhar Ramaswamy.
In my earlier piece covering post-snowflake profitsI urged investors to give Snowflake’s new CEO the benefit of the doubt, given what he brings in expertise, particularly on AI, during his tenure at Alphabet (NASDAQ:GOOGL) Google and Neeva.
Given the chance, I would argue that Snowflake’s new leader, a scientist and visionary who probably knows AI better than most other top executives, could prove a worthy successor as Snowflake repositions its skis for the era of generative AI. With the unveiling of new AI products and freshly lowered expectations, I have no hesitation in remaining bullish on SNOW stock as it costs less than $160 per share.
Snowflake’s Arctic AI model could be a huge deal for the company
With the recent launch of Snowflake’s new open source Enterprise Language Model (LLM), which boasts a staggering 480 billion parameters, Snowflake has officially boarded the LLM train. It will also be interesting to see how technology “optimized for complex enterprise workloads” translates into growth over the coming years.
Of course, it will be some time before Snowflake’s latest AI innovations propel its stock higher again. However, after the latest sell-off in SNOW stock, expectations appear modest enough that a surprising development could be expected in the near future. Additionally, I find the news on the Arctic has been rather muted, especially given the potential advantages it may have over other business-focused LLMs on the market.
Indeed, AI model launches and announcements don’t seem as exciting in 2024 as they do in 2023. Some may view LLMs as commoditization, with new chatbots seemingly released regularly. From OpenAI to Anthropic to the Magnificent Seven, it seems like every company has a piece of the AI pie right now.
As the number of open source and proprietary AI models increases over time, we may very well see a serious increase in competition. That said, I don’t consider LLMs to be trivialized, especially when there are many ways for one model to differentiate itself from others. Ultimately, the number of offers probably won’t matter; THE…
