Snowflake Inc. (SNOW): Is This Cloud Computing Stock a Good Buy Right Now?

We recently compiled a list of the 10 Best Cloud Computing Stocks to Buy Now. In this article, we are going to take a look at where Snowflake Inc. (NYSE:SNOW) stands against the other cloud computing stocks. You can also check out the 10 Best Artificial Intelligence Stocks to Buy Under $10 here.

Cloud computing has changed the way we access and manage computing resources. The industry is poised for significant growth in the coming years. Market estimates suggest a jump from a size of $0.68 trillion in 2024 to a projected $1.44 trillion by 2029, reflecting a compound annual growth rate (CAGR) of 16.4%. This upward trend is expected to continue, with the market reaching a value of almost $2.5 trillion by 2032. These figures point towards a rising adoption and utilization of cloud solutions across various industries.

The growth in the industry is likely to be driven by a number of factors. One key factor is the growing recognition among large enterprises of the impact that cloud computing can have on their operations. In fact, an impressive 94% of companies across the globe have already adopted cloud computing solutions. This high rate of adoption is expected to have a remarkable economic impact, with forecasts showing that it could generate approximately $3 trillion in revenue by the year 2030.

Currently, North America and Europe are leading the way in cloud computing adoption, with Asia Pacific not far behind. North America holds the largest share of the global market at 41%. The region's early adoption of technologies like artificial intelligence (AI) and machine learning (ML) has played a key role in driving its cloud market growth.

Even with stricter regulations around data privacy and security, the European markets are also displaying consistent growth in cloud adoption. Countries like Sweden, Finland, the Netherlands, and Denmark are leading the way in cloud adoption within specific industries. This suggests that European businesses are increasingly recognizing the value of cloud solutions while navigating a regulatory landscape that prioritizes data protection.

The Asia Pacific region is also currently experiencing a rise in cloud computing adoption. The market size rose to an estimated $32.5 billion in 2022 and is projected to be a significant contributor to the global cloud computing market in the coming years. This growth can be attributed to a large-scale shift towards digital business models across various industries in the region. The need for cost-effective solutions has fueled cloud adoption among small and medium businesses (SMBs). Approximately 78% of SMBs are currently using cloud services, with 39% of these businesses spending up to $600,000 per year on public cloud services.

Our Methodology

To shortlist the best cloud computing stocks to buy now, we relied on Insider Monkey’s extensive database of 920 hedge funds as of Q1 2024. We picked the cloud computing stocks with the highest number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A software engineer at work, surrounded by a wall of computer monitors connected to a 'Data Cloud' platform.

Snowflake Inc. (NYSE:SNOW)

Number of Hedge Fund Holders: 73

Snowflake Inc. (NYSE:SNOW) founded in 2012, has carved a niche in the cloud computing world by offering a data platform that caters to a global audience. By consolidating information into a single source, Snowflake Inc. (NYSE:SNOW) allows businesses to develop data-driven applications and facilitate data sharing, all within its user-friendly platform.

Snowflake, Inc. (NYSE: SNOW) delivered a strong first quarter for fiscal year 2025, ending April 30, 2024. Total revenue reached $828.7 million, reflecting a healthy 33% year-over-year growth. This growth was driven by a core business that continues to thrive, with product revenue rising 34% year-over-year to $789.6 million.

Analysts are highly bullish on the company's future, with a consensus rating of "Strong Buy". This assessment is based on 33 analyst ratings in the past 3 months. The average 12-month price target for Snowflake Inc. (NYSE:SNOW) sits at $203.59, indicating a potential upside of 51.59% from the current price.

Here’s what ClearBridge Investments said about Snowflake Inc. (NYSE:SNOW) in its Q2 2023 investor letter:

“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology.

Snowflake Inc. (NYSE:SNOW), a cloud-based data platform company, is positioned well to help enterprises better leverage their own data to get the most out of AI models. Though it is still early days in terms of adoption, Snowflake saw workloads for data science, machine learning, and AI use cases grow more than 90% year-over-year in its most recent quarter.”

Overall SNOW ranks 10th on our list of the best cloud computing stocks to buy. You can visit 10 Best Cloud Computing Stocks to Buy Now to see the other cloud computing stocks that are on hedge funds’ radar. While we acknowledge the potential of SNOW as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SNOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.