Late last year, The Motley Fool writers such as myself were asked to choose our top US stock to consider buying for 2025. I went with an under-the-radar growth stock – Snowflake (NYSE: SNOW).
Now, the year is still in its infancy, of course. But so far, this stock is doing well. In January, it rose 18%. That compares to a gain of 3% for the S&P 500 index.
An introduction to Snowflake
Snowflake specialises in data storage and analytics solutions. So, it’s having a lot of success at present on the back of the artificial intelligence (AI) boom.
If a company is interested in applying AI to its own data, the first step is to get that data structured properly. And that’s exactly what Snowflake can help firms do.
New AI products
But it offers much more than this. It also offers its own solutions such as ‘Cortex AI’. This allows customers to build generative AI applications using fully managed large language models (LLMs).
Via Cortex AI, customers can access high-powered models from Anthropic. It’s one of the leaders in the generative AI space with its ‘Claude’ models (which are similar to ChatGPT).
DeepSeek integration
It’s worth noting that in January, Snowflake made the move to offer DeepSeek (the new Chinese generative AI app) on its AI model marketplace. This pushed its share price up significantly.
Snowflake said that it weighed the potential risks of hosting Chinese AI technology before ultimately deciding to offer it to customers. “We decided that as long as we are clear to customers, we see no issues supporting it,” said Christian Kleinerman, executive vice-president of product.
I remain bullish
Looking ahead, I remain optimistic about this tech stock. I believe it’s worth considering for a portfolio today.
And I’m not the only one who’s bullish here. Recently, Wedbush technology analyst Dan Ives – who has an Outperform rating on the stock – lifted his price target to $210. That’s roughly 16% above the current share price. Ives believes the company’s momentum will continue in 2025 as more businesses look for secure, cloud-based data platforms and experiment with AI.
We believe Snowflake represents a strong 2nd derivative player in the Al revolution that is well-positioned to capitalise on elevated demand for Al use cases especially as more enterprises move more workloads to the cloud over the next 12-18 months in order to power Al tools and products.
Wedbush Securities analyst Dan Ives
A high-risk, high-reward play
OK, at first glance, this stock looks really expensive. Currently, the price-to-earnings (P/E) ratio is 188. But there’s a reason for this — the company is just turning profitable now. So, it needs some time to grow into its P/E ratio.
Nevertheless, the high valuation does add risk. If growth slows or is lower than expected (revenue growth of 23% is expected this financial year), the stock could be volatile. And it may not grow sufficiently into that P/E ratio.
Taking a long-term view, however, I remain upbeat. I continue to believe this is a top US stock to consider for 2025 and beyond.
