A person looking at graphs and charts on a transparent futuristic interface.

A Bull Market Is Coming: 1 Supercharged AI Growth Stock To Buy Before It Soars 223%, According To Wall Street | The motley fool

There is a compelling argument that 2023 will go down in history as the year artificial intelligence (AI) came of age. Generative AI’s ability to eliminate repetitive tasks, summarize data, and even simplify coding has businesses rushing to capitalize on the promise of increased productivity.

Experts are still probing the potential that artificial intelligence represents, and estimates vary widely. “AI is expected to more than quadruple the productivity of knowledge workers by 2030,” predicted Cathie Wood, CEO of Ark Investment Management. The company’s Big ideas 2023 report estimates that “If [AI] suppliers had to capture 10% of [the] value created by their products, AI software could generate as much as $14 trillion in revenue…in 2030.”

Because of the potential for significant earnings, investors are searching far and wide to discover candidates positioned to benefit from the AI ​​gold rush. This is especially true for stocks whose prices are still reeling from the recession. As a result, analysts are remarkably optimistic about the prospects for a former top-tier player and investor favorite. In fact, if Wall Street is right, this stock could soar as much as 223% over the next 12-18 months.

A person looking at graphs and charts on a transparent futuristic interface.

Image source: Getty Images.

An explosion of data

“Knowledge is power,” or so goes the old proverb. In the last decade or so, there has been a surge in data from an increasing number of sources over the past decade. Some reports suggest that 99% of the data was produced in the last 10 years, and the real data explosion will only accelerate from here.

Companies can mine each other’s sources of information to develop actionable data, but with so many silos, systems, and cloud providers, it’s nearly impossible to aggregate them to make sense of it all. Luckily, Snowflake (TO SNOW -0.24%) has the answer for that.

The company’s data warehouse offers a variety of data processing, analytics and archiving solutions that Snowflake says are “faster, easier to use, and far more flexible than traditional offerings.” Perhaps just as important to users, Snowflake’s transparent pricing is based on data storage volume, so it doesn’t charge a fixed subscription fee. This allows customers of all sizes to pay for what they need and scale their usage as they grow.

Snowflake has recently expanded existing deals with Microsoft, AmazoniaWeb Services e Nvidia to bring the power of large-scale customized generative AI models and machine learning capabilities to the masses. These partnerships will provide companies with the tools they need to build custom large language models (LLMs) that form the foundation for Generative AI. Adding AI capabilities to the mix will take the usefulness of this data to the next level and will likely be a boon to the Snowflake business.

Enviable growth

Even during the worst recession in over a decade, Snowflake has seen enviable growth. For the first quarter of fiscal 2024 (ended April 30), revenues grew 50% year-over-year to $590 million. At the same time, Snowflake’s $3.4 billion remaining performance obligation (RPO) increased 31%, while its net revenue retention rate of 151% showed that existing customers are spending 51% more than the same period last year.

It’s worth noting that while Snowflake isn’t yet profitable, the company generated strong and growing operating and free cash flow of $299 million and $283 million, respectively, evidence that its lack of profits are a result of non-cash charges, including depreciation, and continued profitability is only a matter of time.

Snowflake’s robust user growth underpins its solid financial performance. While the total number of customers of 8,167 grew 29% year over year, customers who spent more than $1 million in the prior 12 months grew 80%, setting the company up for future success.

Wall Street is decidedly bullish on Snowflake

Like many tech stocks, Snowflake fell hard last year, losing 58% of its value, even as the company continued its robust financial growth. Many on Wall Street believe the sale is exaggerated.

A consensus estimate from the 45 analysts who follow Snowflake translates to an average price target of $195. That suggests potential gains for investors of just 4% over Snowflake’s current share price. However, the $600 top price target suggests this AI stock could soar as much as 223% over the next 18-month year. Additionally, of the 45 analysts covering Snowflake, 29 rate it a buy or a strong buy, and only one recommends selling, citing its high valuation and resulting downside potential.

To be clear, Snowflake has Never sold cheap for a high multiple even at its IPO. However, the stock is currently selling for 17 times next year’s sales, close to its most reasonable valuation never.

With digital transformation and the AI ​​gold rush as the catalysts, combined with a historically low valuation and resounding support from Wall Street, now is a great time to buy Snowflake stock in view of the inevitable recovery ahead.

John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, serves on the board of directors of The Motley Fool. Danny Vena has positions at Amazon.com, Microsoft, Nvidia and Snowflake. The Motley Fool has locations and recommends Amazon.com, Microsoft, Nvidia and Snowflake. The Motley Fool has a disclosure policy.

#Bull #Market #Coming #Supercharged #Growth #Stock #Buy #Soars #Wall #Street #motley #fool
Image Source : www.fool.com

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *