The rapid advancement of artificial intelligence (AI) is revolutionizing industries and driving explosive growth for companies at the forefront of this technology. According to IDC, global AI spending is projected to surge at an annual rate of 29% over the next five years, reaching a staggering $632 billion in value by 2028. This upward trend is expected to propel companies like Nvidia and Snowflake to new heights, with the potential for parabolic growth.
Nvidia, a pioneer in AI hardware, has already experienced remarkable success, with its stock soaring 152% in recent years. The company’s data center graphics processing units (GPUs) based on the Hopper architecture have been in high demand, with a reported waiting period of up to a year. The introduction of the more powerful H200 processor has further accelerated growth, and the upcoming Blackwell platform is expected to deliver a 4x performance jump over Hopper chips. With multiple high-profile customers, including Microsoft and Meta Platforms, lined up for this chip, Morgan Stanley estimates that Nvidia could sell $200 billion worth of Blackwell-based server systems next year.
Meanwhile, Snowflake, a cloud-based data platform provider, is integrating AI-focused capabilities into its data cloud platform. The company has been renting GPUs to meet customer demand for its newer product features, and its AI offerings are gaining traction. With over 2,500 customers using its AI tools, Snowflake is well-positioned to upsell its services to its large customer base. The company’s net revenue retention rate of 127% indicates that it is winning a larger share of customers’ wallets, and its remaining performance obligations have surged 48% year over year.
While Snowflake’s investments in AI are currently weighing on its margins, the company’s revenue growth is expected to accelerate in the long run. As AI adoption continues to rise, Snowflake’s stock has the potential to rebound strongly from its current slump. With its AI-focused capabilities and strong customer base, Snowflake is an attractive option for investors looking to capitalize on the AI boom.
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