Snowflake Shares Up on Upbeat Guidance: ETFs to Benefit

Software solutions provider Snowflake SNOW reported a moderate start to the fiscal year with first-quarter revenue topping expectations. Although the company missed on earnings estimate, upbeat guidance sent shares up by 4.4% in after hours on May 22, 2024.

This puts focus on Snowflake-heavy ETFs like Spear Alpha ETF SPRX, TrueShares Technology, AI & Deep Learning ETF LRNZ and Global X Cloud Computing ETF CLOU. The cloud-based data warehousing company announced that its revenue for the quarter was $828.7 million, marking a 33% increase from the same period last year. It beat the Zacks Consensus estimate by 5.31%.

The company's adjusted earnings per share came in at $0.14, which was $0.04 below the Zacks Consensus estimate of $0.17. Despite the EPS miss, investors focused on the company's robust revenue performance, which was driven by a 34% year-over-year growth in product revenue, totaling nearly $790 million.

The company guided for Q2 product revenue in the region of $805-810 million, representing 26-27% year-over-year growth. For 2025, Snowflake expects product revenue at $3.30 billion, up from a prior forecast of $3.25 billion. Snowflake's net revenue retention rate stood at 128% in Q1, indicating strong customer satisfaction.

There's a noticeable shift among companies from conventional methods towards cloud-based solutions. This transition aims to blend digital technologies with more efficient processes while cutting costs. Consequently, firms specializing in cloud-related services like Snowflake are experiencing significant benefits from this trend.

The stock Snowflake has a Zacks Rank #2 (Buy). The stock has an upbeat good growth score of "A." before the release of the earnings, the average price target for Snowflake Inc. was $205.46, based on short-term price targets offered by 37 analysts. The forecasts range from a low of $105.00 to a high of $240.00. The average price target represents an increase of 25.78% from the last closing price of $163.34.

ETFs in Focus

Against this backdrop, below we highlight a few ETFs that have a decent exposure to Snowflake and may benefit in the near term, if Snowflake rises further on AI push.

Spear Alpha ETF SPRX – Snowflake has 7.28% weight

This is another fund which is set to benefit from breakthrough trends in industrial technology. The fund invests on the theme of enterprise digitalization, automation & robotics, AI, environmental focus and decarbonization, photonics and additive manufacturing and space exploration. The fund is heavy on companies like Nvidia, AMD and Snowflake – all are big AI beneficiaries.

TrueShares Technology, AI & Deep Learning ETF LRNZ – Snowflake has 5.10% weight

The ETF is an actively-managed exchange-traded fund that seeks total return by investing in companies that have a competitive advantage with respect to the development and utilization of artificial intelligence, machine learning, or other deep learning technologies.

Global X Cloud Computing ETF CLOU – Snowflake has 4.06% weight

The underlying Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology.

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