As AI fever grips the market, the CEO of Snowflake, Sridhar Ramaswamy, remains laser-focused on building a lasting tech powerhouse, dismissing short-term stock market fluctuations that might distract from the long-term vision. He emphasized the company’s commitment to earning value, one dollar at a time, in an interview with CNBC’s “Squawk Box Europe” on Thursday.
Snowflake, a cloud-based data warehousing company, made headlines with a record-breaking software IPO five years ago. Its stock has since enjoyed a significant surge, fueled by investor enthusiasm for AI-related plays. The company’s platform allows enterprises to store, process, and analyze vast amounts of data, a crucial capability in the age of AI model training and deployment.
However, the rapid influx of capital into the AI sector has sparked concerns about a potential bubble. Investors are increasingly cautious, seeking to differentiate between genuine innovation and mere hype to avoid potential losses should market sentiment shift.
“You don’t control the stock price,” Ramaswamy stated, acknowledging the external pressures while reiterating his internal focus. Snowflake shares experienced a 6.5% jump on Wednesday, contributing to a year-to-date increase of over 60%.
“My focus very much is on value creation. We have to earn dollars, every single dollar at a time, so we are focused on the quarter, focused on the year, but, much more, also on the value that we create with customers. In the long term, the stock market will settle itself,” he added.
His comments come against the backdrop of recent share sales by Snowflake stakeholders. While Ramaswamy declined to comment on specific transactions, he affirmed his personal commitment to the company’s future by stating, “I am not selling any stock, I’m very much in favor of the long-term value that Snowflake is going to be creating, and the sales tend to be very, very modest.”
Toeing the Line of Incremental Adoption
Ramaswamy cautioned against viewing AI as a panacea, advocating for a strategic and incremental approach to its implementation. He highlighted the importance of identifying the areas where AI can deliver the most tangible benefits, acknowledging that not all AI projects are guaranteed to succeed.
He also addressed the potential for employee resistance driven by fears of job displacement. “That’s part of the nuance that executives need to bring in to figure out: Where is the technology most applicable? Some are thinking of AI as a technology that can cure all problems. I think it’s a mistake. Definitely, there’s promise, but some areas are going to be much more amenable than others,” Ramaswamy said.
One of the most significant opportunities lies in AI’s ability to accelerate the value derived from data. By leveraging AI-powered tools, businesses can gain insights and make data-driven decisions more quickly than ever before. Snowflake aims to capitalize on this trend by offering a robust platform for AI development and deployment, empowering its customers to unlock the full potential of their data.
“The time-to-value change is also pretty remarkable. Will there be turbulence along the way in the markets, with respect to how the stock market behaves? Absolutely. But I think the value that is going to come out of this AI revolution, if I may call it that, is pretty firm, and we all need to stay focused on that,” he added.
While the prospect of an AI bubble bursting looms large, Ramaswamy draws parallels to the dot-com era, pointing to companies like Meta, Amazon, and Google that emerged from the ashes to become industry giants. This perspective suggests that even if the current AI hype deflates, companies with strong fundamentals and a clear vision can weather the storm and ultimately thrive.
Echoing this sentiment, Ashley MacNeill of Vista Equity has suggested the market is likely in a bubble. Macneill argued that a “measured” approach to the sector, accepting there will be “waves that are going to adopt this technology” means that the market may, rather than burst, “inflate and deflate as this technology ebbs and flows.”
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