Snowflake Stock (NYSE: SNOW) Gains 19% YTD as Alphabet Divestment Completes

Snowflake's stock price (NYSE: SNOW) has gained impressively through the start of the year, adding 19.10% year-to-date. Holders of Alphabet (NASDAQ: GOOGL) could be forgiven for looking on enviously, with it's own stock having dipped 2.22% YTD. The two companies are however in separate ballparks, with Snowflake's market cap of ~$62billion being dwarfed by Alphabet's $2.28trillion. So why the comparison?

During the fourth quarter of 2024, Alphabet made the significant decision to fully divest its stake in Snowflake by selling 114,554 shares. This move followed a reduction in Alphabet's investment during the third quarter of 2024 when the company sold 421,050 shares of Snowflake. In the grand scheme of things, the ~$20 million potential increase on the holdings is a drop in the ocean to a company that generated $32.77billion in operating income during the previous quarter.

Snowflake'a primary offering, the Data Cloud platform, operates across major cloud providers such as Amazon, Microsoft, and Google. The extensive adoption of Snowflake's platform is evident, with big brands like Hyatt, NBC Universal, and Toyota utilising its capabilities for various applications.

Despite its achievements, Snowflake faced notable challenges in 2024. The company experienced a 22% stock decline, partly attributed to the retirement of its CEO, Frank Slootman.

Under the leadership of current CEO Sridhar Ramaswamy, Snowflake is strengthening its market position through enhanced AI capabilities and strategic partnerships. The company has deployed 1,000 AI use cases, integrating AI models like those from its partnership with Anthropic through Snowflake Cortex AI. This strategic focus on technology and partnerships aims to drive future growth.

Financially, analysts project Snowflake's sales to rise to $5.5 billion by fiscal 2027, with free cash flow expanding to $1.5 billion in the same year. The company's fiscal 2025 product revenue guidance stands at $3.43 billion. Analysts see the SNOW price target close to it's current level, with the consensus of $190.20 marginally above current price action.

With some of the selling pressure abating from Alphabet's divestment completion, there could be a path to the upside should Snowflake be able to continue to see operational successes. Earnings due on 26th Feb can be expected to provide further insights into the latest developments at the firm, with markets expecting EPS of $0.18 on revenue of $955.84 million. The company beat on top and bottom lines in each of the past two reports, and more of the same, alongside upbeat guidance could be just the news that SNOW bulls are looking for.