How Snowflake Investors Can Learn From Microsoft

Leading up to the dot-com bubble, Microsoft Corp MSFT and other high-growth tech stocks surged as investors awarded the companies higher multiples on future prospects.

Following the tech correction, investors were hesitant to stretch valuations on Microsoft shares despite the company's accelerating earnings, Ritholtz Wealth Management's Josh Brown pointed out Tuesday on CNBC's "Fast Money Halftime Report."

"They quadrupled their earnings over the next decade. You know what the stock price did? Nothing," he emphasized, suggesting the same thing could happen with stocks like Snowflake Inc SNOW.

See Also: A Bearish Sign Appears On Microsoft's Chart

"You can have Snowflake quintuple its earnings," Brown said. "It's not a guarantee that you'll eventually make money here."

Brown said he owns some of the companies trading at high multiples. He specifically mentioned CrowdStrike Holdings Inc CRWD.

"Snowflake may end up working out for the same reason that I think CrowdStrike will," Brown said. "But many of these stocks will continue to go lower regardless of growth rate."

SNOW Price Action: Snowflake has traded between $164.36 and $405 over a 52-week period

The stock was down 0.44% at $166.01 Tuesday afternoon.

Photo: courtesy of Snowflake.