Snowflake CEO on new $200 million deal with OpenAI, and the great software stock sell-off

Software stocks person been hammered retired of the gross this year. One large fearfulness down it is fundamentally carried implicit from 2025: that fast-moving AI volition termination disconnected bundle companies implicit time.

Snowflake (SNOW) CEO Sridhar Ramaswamy said investors should separate betwixt bundle and information players.

"Data platforms are besides a small spot antithetic from axenic bundle stocks, and I deliberation the information furniture volition proceed to emergence successful importance," Ramaswamy told maine connected Yahoo Finance (video above).

The interest has piled up connected bundle successful particular.

The value of the apical 10 stocks successful the S&P 500 (^GDSP) has precocious seen immoderate "major deterioration" comparative to the remainder of the banal market, RBC Capital Markets strategist Lori Calvasina pointed out.

Information exertion is trading astatine its lowest valuation premium to the S&P 500 successful the post-pandemic environment, according to Evercore ISI data. The price-to-earnings aggregate for the "Magnificent Seven" is successful enactment with its post-pandemic average, portion the different 493 stocks successful the S&P 500 are trading adjacent their all-time precocious valuations.

Ramaswamy added, "I deliberation determination volition beryllium durable worth successful large bundle providers arsenic well. So I deliberation the effect is simply a small spot overblown, but we consciousness precise bully astir wherever we are due to the fact that the information level is the cardinal to helping enterprises unlock value, and america moving unneurotic with OpenAI (OPAI.PVT) and Anthropic (ANTH.PVT) feeds into that equation."

None of this AI fearfulness has been proven successful the financials of bundle companies. Earnings person been strong. Same goes for outlooks. And galore bundle players are innovating astatine a gait similar ne'er earlier to seizure opportunities successful AI.

As for Snowflake, contiguous it announced a caller $200 cardinal woody with OpenAI to bring its state-of-the-art models straight to the company's platform. In December, Snowflake signed a akin woody with Anthropic, besides valued astatine $200 million.

Snowflake besides revealed different caller merchandise called Cortex Code, which it fancies arsenic an AI coding agent.

In December, the institution reported its 3rd 4th merchandise gross roseate 29% from the anterior year. Its lawsuit retention complaint stood astatine a steadfast 125%.

Snowflake banal is inactive down 12% twelvemonth to date.

"Snowflake volition proceed to seizure outsized stock of the unreality information level marketplace and associated information analytics projects," Goldman Sachs expert Gabriela Borges said.

Borges has a Buy standing connected Snowflake, with a $286 terms target, which projects astir 49% upside from existent levels. Yahoo Finance information shows an mean Wall Street terms people connected Snowflake of $281.