When Snowflake reports first quarter earnings on Wednesday, analysts expect new Chief Executive Sridhar Ramaswamy to tout his plans to make artificial intelligence products a bigger part of company strategy. Snowflake stock has retreated 17% in 2024 amid a sudden CEO change in February.
Snowflake sells data analytics and management software that runs on the cloud computing platforms of Amazon.com and others. The company is evolving into a cloud data management platform. It faces stiff competition from privately-held Databricks.
Snowflake Stock: Low Bar For New CEO?
Analysts project April-quarter EPS of 18 cents a share, up 20% from a year earlier, with revenue rising 26% to $787 million.
In February, Snowflake announced that then-CEO Frank Slootman was retiring. The software maker lowered fiscal 2025 guidance at the same time.
Some analysts are cautious heading into the Snowflake earnings report.
"Investors are already expecting a bigger beat compared to recent periods, given a more pervasive narrative that the company lowered the guidance bar for its incoming CEO," said Morgan Stanley analyst Keith Weiss in a report.
At TD Cowen, analyst Derrick Wood said in a report: "Investor feedback intra-quarter has been weak, but buyside expectations around business model upside do not seem overly conservative, which could create near-term crosscurrents on the stock."
Investor Day Set For June 4
Also, Snowflake hosts an investor day on June 4. At the event, it's expected to update strategy and financial goals.
Further, Ramaswamy had been Snowflake's senior vice president of artificial intelligence. Snowflake acquired artificial intelligence startup Neeva, where Ramaswamy was CEO, in 2023.
Earlier, Ramaswamy ran Google-parent Alphabet's digital advertising business.
Goldman Sachs analyst Kash Rangan is upbeat on the CEO change.
"Investors may be underappreciating Mr. Ramaswamy's strong technical background in databases, his experience running Google's core search and e-commerce products at scale, and his associated involvement with the respective go-to-market teams," Rangan said in a report published in April.
He added: "With Snowflake looking to re-accelerate growth, we believe 2025's initial product revenue growth guidance (22%) could prove conservative."
Snowflake, Rival Databricks Eye AI Acquisitions
Meanwhile, Snowflake is in talks to buy startup Reka AI for over $1 billion, Bloomberg recently reported.
Both Snowflake and rival Databricks have been making AI-related acquisitions. Databricks in 2023 acquired generative AI startup MosaicML for $1.3 billion.
In September, Databricks raised over $500 million at a $43 billion valuation. Investors included chipmaker Nvidia, one of the hottest AI stocks.
"While Databricks grabbed mindshare with data scientists early, Snowflake sees the market being big enough for multiple vendors," said Evercore ISI analyst Kirk Materne in a report. He added: "The fiscal 2025 guide was not influenced by a change in the competitive environment — though we understand why that narrative is going to persist until SNOW's AI products start to move the needle."
Also, Databricks recently invested in Paris-based Mistral, a well-funded AI startup that's building high-performance large language models.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
