With Snowflake's (SNOW) stock getting bid up to even more incredible multiples since the company posted its October quarter report last Wednesday, it's probably worth remembering that the competition has made some noteworthy announcements of its own over the last couple of weeks.
The day after Snowflake reported, Microsoft (MSFT) announced its Azure Synapse cloud data warehousing/analytics platform was being made generally available to customers (it was previously available in preview mode). Among other things, Microsoft has been emphasizing Azure Synapse's powerful and versatile database-querying engine; its ease of management; and its tight integration with Microsoft's Power BI business intelligence software and Azure Machine Learning programming interfaces (APIs).
Two days before that, Amazon.com (AMZN) made the preview for its AQUA accelerators (used by its Redshift data warehousing service) open to all customers, and said that general availability would arrive in January.
AQUA, first unveiled a year ago, uses FPGAs placed within AWS storage servers to speed up data processing and cut down on how much data is moved around between compute and storage servers. Amazon claims this architecture allows Redshift to "run up to ten times faster than any other cloud data warehouse."
And today, Amazon unveiled Redshift ML, a service that's promised to make it easy for developers to build, train and deploy AI/machine learning models using data stored within Redshift data warehouses.
Google (GOOGL) , meanwhile, is getting set to roll out its BigQuery Omni service, which was unveiled in July and is currently being tested by select customers. Omni makes it possible for a data warehouse relying on Google's popular BigQuery warehousing/analytics service to leverage computing and storage resources from multiple clouds, rather than just Google's. That makes it a good fit for projects that aim to analyze and integrate data generated by apps spread out among more than one cloud.
To be clear, none of these moves spells doom for Snowflake, which has competitive strengths of its own and is also steadily evolving its cloud data warehouse platform. And with Snowflake coming off an October quarter in which its revenue rose 119% annually, business is definitely pretty good for the company right now.
But given that Snowflake's valuation has soared to levels that are extraordinary even by the standards of high-growth software firms -- after accounting for outstanding stock options and restricted stock units, Snowflake now trades for more than 95 times its fiscal 2022 (ends in Jan. 2022) billings consensus estimate -- it does feel like markets are ignoring the fact that the company does face meaningful competition from some rather well-known tech giants/public cloud providers.
There are some parallels here with Zoom (ZM) , another fast-growing company with a differentiated platform that has become valued as if the serious competition it faces from a tech giant that's investing a lot in improving a rival platform doesn't exist.
But these are the kinds of things that happen in a bubble-like environment. Investors overwhelmingly focus on the positives that exist for a favored company's story (its technology, its near-term growth rates, its long-term addressable market, etc.) and completely lose sight of pesky little things such as forward sales/earnings multiples or product launches from rivals.
It's tough to predict just when this euphoric state of affairs will end. But expect a lot of fallout when it does.