Why Snowflake Stock Is Soaring Today

snowflake (NYSE:SNOW) The stock rose sharply in Friday trading. Shares of the data technology company closed up 9.4% on the day, according to the data. S&P Global Market Intelligence.

While there wasn’t any company-specific news to push Snowflake higher today, the company’s valuation benefited from strong earnings results from the leading cloud services provider. In particular, Amazon’s better-than-expected fourth-quarter results helped Snowflake’s stock price rise sharply. Promote.

Strong cloud demand bodes well for Snowflake

Snowflake is a leader in data warehousing services and related analytics and data management technologies. The company’s data cloud platform helps large enterprises and organizations integrate information generated across departments. Amazon, Microsoftand letterof Cloud infrastructure servicesIn turn, strong demand indicators from leading cloud infrastructure providers tend to bode well for Snowflake’s performance.

After the market closed yesterday, Amazon released its fourth-quarter report, which showed that the company’s sales increased 14% year-on-year to $170 billion, significantly higher than analysts’ average sales forecast of $166.2 billion. The company’s Amazon Web Services (AWS) unit grew 13% year over year to $24.2 billion.

Earlier this week, Microsoft posted better-than-expected results and Amazon posted a strong fourth-quarter report. In the second quarter of this fiscal year as of the end of December 2023, Microsoft’s revenue was US$62.02 billion, exceeding Wall Street’s expected sales of US$61.12 billion during the period. The software giant’s revenue during the period increased by 18% year-on-year, and Azure’s basic Sales of facilities business and other cloud services increased by 30% year-on-year.

Is Snowflake stock a buy?

Snowflake stock is showing strong momentum amid excitement about artificial intelligence (AI) and improving prospects for demand in key cloud businesses. On the one hand, the company’s shares are still down about 46% from the peak reached in 2021.

SNOW PS Ratio (Forward) Chart

SNOW PS Ratio (Forward) Chart

Snowflake is valued at about 20 times this year’s expected sales, and its valuation is highly dependent on growth. The company’s valuation profile means its shares aren’t suitable for every investor.

Snowflake, on the other hand, is growing rapidly and is poised to continue to play a major role in the development of analytics and artificial intelligence services. For risk-tolerant investors, the stock has the makings of a worthy portfolio, but you should weigh your personal circumstances against your tolerance for volatility before buying big into the stock.

Should you invest $1,000 in Snowflake right now?

Before buying Snowflake stock, consider the following factors:

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John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool; Suzanne Frey is an Alphabet executive and a board member of The Motley Fool. Keith Noonan Does not hold any of the above stocks. The Motley Fool holds and recommends Alphabet, Amazon, Microsoft and Snowflake. Motley Fool has disclosure policy.

Why Snowflake Stock Is Soaring Today Originally published by The Motley Fool

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