Could there be a rare opportunity here for long-term investors? Let’s take a look at the landscape.

Are AI fears overblown?

The reason these shares have tanked recently is investors have grown concerned that artificial intelligence (AI) solutions from the likes of Anthropic (Claude) and OpenAI (ChatGPT) are going to destroy their business models. The theory here is that enterprises will be able to create their own software using AI and therefore won’t need to pay ongoing fees to companies like Salesforce, ServiceNow, Monday.com, and Snowflake (NYSE: SNOW).

Now, there’s no doubt that AI will disrupt some software companies. But I think there’s a level of panic (and offloading) in the market right now that’s unwarranted.

I believe a lot of software companies will continue to do well in the AI era. So, there could potentially be an investment opportunity starting to emerge.

This stock looks oversold

One stock that I see as oversold right now is Snowflake. It’s a data storage and analytics company that helps businesses store and structure their data so that they can apply AI to it.

It has fallen from $265 to $168 recently (a drop of almost 40%). After that drop, the company’s price-to-sales ratio has slumped to 10 – an all-time low.

My belief is that this company – which has been growing at a prolific rate – will continue to have success in the AI era. Because it’s focusing on the one thing AI can’t operate without – data.

Competition from rivals such as Databricks and Amazon is a risk. However, with a 4.6 rating on Gartner, I’m optimistic that the company can continue to thrive, so I think it’s worth a look.

Other opportunities in software

Turning to Salesforce – one of the largest US software businesses – it also looks interesting, in my view.

Its customer relationship management (CRM) platform is potentially disruptable. However, enterprises all over the world depend on it and the cost of switching is high so I don’t expect the company’s revenues to suddenly fall off a cliff.

Meanwhile, the company is rolling out powerful AI agent solutions. So, it could end up doing well as businesses automate their operations.

As for its valuation, it’s currently trading on a price-to-earnings (P/E) ratio of 16 – another all time low. At that multiple, I think it’s definitely worth a look.

Zooming in on cybersecurity powerhouse CrowdStrike, I’m not going to say that this is a ‘once-in-a-decade’ opportunity to buy as this stock has had some big drops in recent years. However, after plummeting from $550 to $395, I do think it’s worth a look.

In my view, AI is unlikely to reduce demand for cybersecurity software. If anything, AI should increase demand for cybersecurity because firms are going to have to protect themselves from a lot more threats.

Of course, cybersecurity is a dynamic industry so there’s no guarantee that this company will continue to have success. But with the stock currently trading 30% below its recent highs at a much lower valuation, I see quite a bit of potential.

The post A rare chance to buy US software growth stocks like Salesforce, Snowflake, and CrowdStrike cheaply? appeared first on The Twelfth Magpie.

But not every AI stock’s making headlines and seeing huge amounts of hype. Here’s a look at three lesser-known shares that are quietly making investors a fortune.

A vital data player

First up, we have Snowflake (NYSE: SNOW). It offers solutions that enable businesses to get their data structured properly for AI use.

Late last year, I named this as my top US growth stock for 2026. That call was pretty good – it’s up about 75% year to date. I still believe it’s worth considering however. Recently, a company insider said he’s expecting revenue to more than double in the next few years.

If the company can achieve that kind of growth, I’d expect the share price to be materially higher in a few years’ time.

A risk here is competition from rival Databricks. Not only could this company capture market share but if it does an IPO, it could steal investor capital.

I’m optimistic about the long-term outlook though. For my portfolio, this is now a core AI holding.

Specialised chip-making equipment

Next, we have Lam Research (NASDAQ: LRCX). It makes highly specialised machinery that’s critical for manufacturing the advanced chips that are used in AI.

It recently provided guidance that was above Wall Street’s estimates as chipmakers (like Taiwan Semi and Intel) ordered more of its equipment. So it clearly has momentum right now.

Now, this stock’s up about 120% this year (and more than 60% in three months). After that kind of run, I wouldn’t chase it as the valuation’s risen considerably.

If it was to drop back 10%-20% though (which it probably will do at some point), I think it could be worth considering. China remains a risk as the company generates a large chunk of revenues there, but the long-term growth story associated with semiconductor production looks compelling, in my view.

Top-notch cybersecurity

Finally, we have Zscaler (NASDAQ: ZS). It’s a fast-growing cybersecurity company that is helping companies manage AI-related threats

This stock is up about 80% this year. Yet despite these impressive gains, no one is really talking about it.

From an investment perspective, Zscaler’s higher up on the risk spectrum. Not only does it face intense competition from larger players like CrowdStrike and Palo Alto Networks but it’s only just turning profitable now.

Taking a long-term view though, I see a ton of potential. Because AI’s going to dramatically increase the threat landscape for businesses.

“We are rapidly expanding our AI security portfolio to address the emerging risks of AI models and applications.”
Zscaler CEO Jay Chaudhry

It’s worth noting that the company recently forecast annual revenue above Wall Street estimates. It seems a rise in cybercrime, and the rapid adoption of generative AI, have prompted companies to increase investments in cybersecurity to safeguard their digital infrastructure and data.

Given this momentum, I believe the stock’s worth considering today.

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However, taking a two-year view, I see more potential in other growth stocks. Here’s a look at one I believe can potentially outperform those three aforementioned names over the next two years.

A stock for the next phase of AI

The company I want to zoom in on is Snowflake (NYSE: SNOW). It’s a US-listed technology company that helps organisations apply artificial intelligence (AI) solutions to their data.

The platform’s key selling point, the AI Data Cloud, is that companies can bring together all of their data onto it, eliminating silos. They can then easily run AI models (like ChatGPT or DeepSeek) on the data without moving it out of the secure platform boundary (a big plus for large enterprises who are concerned about data security and privacy).

It’s worth noting that this week, Snowflake announced a partnership with AI powerhouse Palantir. This could make its offer even more powerful.

“Thousands of customers are betting their business on Snowflake and more than 6,100 accounts are using Snowflake’s AI every week. We have an enormous opportunity ahead as we continue to empower every enterprise to achieve its full potential through data and AI.”
Snowflake CEO Sridhar Ramaswamy

Snowflake versus the others

So why do I think this stock can outperform Nvidia, Tesla, and Rigetti over the next two years? Well, it comes down to growth, valuations, and market-cap.

In the table below, I’ve put some key growth and valuation metrics for the four stocks.

Now, looking at those figures, it’s not like Snowflake’s the hands down winner in every category. However, comparing it to the other three names, it wins in several key categories against each stock.

For example, compared to Nvidia, it has a lower price-to-sales ratio and a much lower market-cap (Nvidia’s the largest company in the world today). This leads me to think it could attract investors looking for smaller, up-and-coming AI players (ie the next Nvidia).

Compared to Tesla, it’s forecast to have much higher top-line growth next year as well as more earnings growth. It’s also considerably smaller than the electric vehicle (EV) maker.

Finally, compared to Rigetti, it has a much lower valuation (Rigetti’s valuation is in ‘bubble’ territory in my view). And unlike the quantum computing company, Snowflake has both earnings and earnings growth, which could attract institutional investors.

Worth a closer look

Now, my prediction could turn out to be horribly wrong, of course. Growth stocks can do crazy things at times and we could see Nvidia, Tesla, or Rigetti shoot up and leave Snowflake for dead.

A lot will depend on Snowflake’s top-and bottom-line growth. If growth stalls due to less spending on data and AI, the stock could deliver disappointing returns.

Recent earnings from the data company have been very encouraging though with product revenue growth accelerating to 32% in the last quarter (which makes me think it could exceed 24% growth next year). So I’m optimistic about the stock’s trajectory.

In my view, this is a stock that long-term growth investors should consider buying.

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Tech stocks

It’s no secret that tech stocks are flying right now. Today, we’re in the midst of a powerful artificial intelligence (AI)-driven tech revolution, and the companies at the heart of it are delivering strong gains for investors.

One stock I really like here is Snowflake (NYSE: SNOW). It’s a US-listed company that provides powerful data solutions. Using its platform, companies of all shapes and sizes can structure their data effectively, eliminating siloes. They can then apply AI models to it securely and use it to gain insights.

Right now, Snowflake has a lot of momentum. Last quarter, for example, product revenue growth was 32% (up from 26% in the previous quarter). That’s a strong level of top-line growth. And if the company can keep growing like this, it could be a great long-term investment (despite the fact it has a high valuation today).

Of course, it may not continue growing like this. We could see companies suddenly spend less on AI.

However, I think it’s well positioned for future growth. To my mind, the stock – up 57% this year – deserves a look.

Value shares

If tech stocks are too racy, value shares (those that appear undervalued) could be worth considering. Plenty of shares in this area of the market are doing well right now.

An example here is insurer Prudential. It’s up 59% this year but still looks cheap on a forward-looking price-to-earnings (P/E) ratio of 11.4 (below the UK market average).

It’s not without risk – its focused on the Asian and African markets and these can be unpredictable. I believe the stock warrants attention though.

Dividend shares

Dividend shares are another potential option for those who are a little more cautious when it comes to investing. These pay investors regular income (out of company profits).

On the London Stock Exchange, there are many shares yielding 6% or more today. Names include MNG, Aviva, and Primary Health Properties. While dividends are never guaranteed, I think all of these stocks are worth a look.

Gold stocks

Gold stocks are also worth highlighting. These are shares in companies that explore for and/or produce gold. The price of gold’s around $4,000 per ounce today. Yet plenty of well-established gold producers have costs under $2,000 per ounce.

What this means is that many companies are making a ton of money right now. And this is translating to great returns for investors.

I’ll point out that gold stocks are higher up on the risk spectrum, because a lot of things can go wrong in the mining industry.

They could be worth including in a portfolio though. Some names worth checking out include Newmont, Barrick Mining, and Pan African Resources.

The post Tech stocks, value shares, dividends, gold…there are so many ways to make money in this bull market appeared first on The Twelfth Magpie.

Now, this stock’s expensive. Currently, it sports a forward-looking price-to-earnings (P/E) ratio of 181. I don’t see that high earnings multiple as a deal-breaker however. When the stock pulled back a little earlier this month, I bought more of it for my ISA.

At the heart of the AI boom

I expect Snowflake to be a major beneficiary of the AI boom, because it offers products that can help organisations get started with the technology.

Its AI Data Cloud offer is a fully-managed data platform that enables companies to structure their data effectively (eliminating data siloes), run analytics, and securely create and deploy large language models (LLMs). Trusted by over 12,000 customers (including more than 750 of the Forbes Global 2000), it’s a powerhouse of a platform.

Share price pullback

Now, recent earnings here were very strong with growth accelerating significantly. For the quarter, product revenue growth was 32%, up from 26% in the prior quarter. This led to a sharp rise in the share price with the stock hitting $250 in late August.

However, to my surprise, it has pulled back to $216 recently. Given the drop, I decided to add to my position. I snapped up another tranche of shares at $224 per share as I’m convinced the share price is going higher in the long run.

Is the high valuation a risk?

What about high valuation though? Should I be concerned about this? Well, here’s the thing. Snowflake’s only just turning profitable so the P/E ratio doesn’t really mean much (because profits – the ‘E’ in P/E – are still so small).

With a growth stock like this, P/E ratio isn’t usually a good indicator of future returns. If revenue growth stays strong and profits climb, the stock could do well despite the high multiple.

That’s what I expect to happen here. In my view, Snowflake’s revenue growth’s likely to remain strong at around 30% year on year in the medium term, boosting earnings and the share price.

It seems analysts agree with my view that the stock can climb higher. Currently, the average price target is $263 but many analysts have targets in excess of $275 (about 27% above the current share price).

Worth a look

Of course, while the P/E ratio may not mean much, there are plenty of other risks here. If product revenue growth was to suddenly drop sharply, I’d expect the stock to underperform because with a price-to-sales ratio of 18, it’s priced for strong growth.

Taking a five-year view however, I think this stock has the potential to generate strong returns. To my mind, it’s worth considering as a growth play.

The post This AI growth stock has a P/E ratio of 181. And I’m a buyer! appeared first on The Twelfth Magpie.

Over the next 12 months, however, I see more potential in another AI stock. Here’s why I reckon it will outperform these shares over this timeframe.

A top AI stock

The stock I want to highlight today is Snowflake (NYSE: SNOW). It helps organisations store and structure their data and then apply AI solutions to it.

This company came to the market back in 2020. Currently, it’s trading well above its Initial Public Offering (IPO) price, but well below its all-time highs.

Investors are discovering Snowflake

There are four main reasons I believe Snowflake can outperform the other two stocks over the next year. The first is that the market is just waking up to the fact that this company is a key AI player.

We can see this in the share price. While shares in Nvidia and Palantir have been charging higher for years, this stock has only started to move higher in the last nine months or so.

Why are investors suddenly realising it’s a major AI play? Product revenue growth.

Last quarter (ended 31 July), product revenue came in at $1.09bn, up 32% year on year. That level of growth was up from 26% the previous quarter, signalling that demand for the company’s data/AI solutions is increasing.

Analysts are bullish

Second, analysts are scrambling to lift their price targets. Since Snowflake’s last earnings report on 27 August, the stock has received a ton of upgrades.

Nvidia and Palantir have had upgrades too recently. But there have been more here (around 30 brokers have increased their price targets for Snowflake over the last week).

Note that a lot of analysts see the potential for gains of 20%-25% in the medium term. Broker price target increases generally push a stock higher.

Smaller market cap and lower valuation

Next, we have the company’s size. Today, Snowflake is far smaller than the other two businesses.

Currently, its market cap is only around $80bn. That compares to $370bn for Palantir and $4.3trn for Nvidia.

Related to size is valuation. Looking at price-to-sales ratios, Snowflake is currently trading at 17 versus 21 for Nvidia and 89 for Palantir.

So, it’s significantly cheaper than the other two stocks by this metric.

Potential for a catch-up

Finally, and this ties back to my first point, Snowflake has lagged other AI stocks over the medium term. While Nvidia and Palantir have soared to new all-time highs over the last year, Snowflake hasn’t.

So, I think it has some catching up to do. I expect it to outperform as investors realise this company is the real deal when it comes to AI.

Worth a look

Now, there’s no guarantee it will outperform the other two AI stocks of course. The company faces competition from firms like Amazon and Databricks and a slowdown in growth is always a risk.

It’s worth pointing out that the valuation is high. Therefore, it could experience a wobble over the next 12 months (as could Nvidia and Palantir).

I’m excited about the potential here though. I think Snowflake is worth considering as a growth stock today.

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But it’s not my favourite AI stock right now. With its market-cap sitting at a whopping $4.3trn, I see far more investment potential in a smaller technology company that’s not getting nearly as much attention.

My top AI stock right now

The stock I’m really excited about is Snowflake (NYSE: SNOW). It’s a data storage and analytics company that helps companies deploy AI and serves about 750 of the Forbes Global 2000 businesses.

Listed on the New York Stock Exchange, it currently has a market-cap of $80bn. So it’s far smaller than Nvidia and many other tech stocks.

Now, I listed this as my top US stock to consider buying for 2025 and it has done well, rising about 50% year to date. I think it’s just getting started however. In my view, there’s potential for significant gains from here.

Why I’m bullish

Why am I so bullish on Snowflake? There are a few reasons. One is that the company’s clearly benefitting from the growth of the AI industry.

For the quarter ended 31 July, product revenue came in at $1.09bn, up 32% year on year. This was an acceleration of growth relative to the previous quarter where growth was 26%, suggesting that interest in the company’s AI solutions is increasing. Net revenue retention rate for the quarter was 125%, signalling that existing customers are spending more money with the company.

It’s worth noting here that if a business wants to deploy AI, the first step is to get its data structured properly. This is what Snowflake specialises in, and it explains the high level of growth being generated at present.

Another reason I’m bullish is that the company has a brilliant CEO in Sridhar Ramaswamy. Since he came on board last year, product revenue growth has been on fire.

“Thousands of customers are betting their business on Snowflake and more than 6,100 accounts are using Snowflake’s AI every week. We have an enormous opportunity ahead as we continue to empower every enterprise to achieve its full potential through data and AI.”
Snowflake CEO Sridhar Ramaswamy

I also like broker activity here. Since the company posted its most recent earnings on 27 August, a lot of analysts have increased their price targets for the stock with many going to between $270 and $300.

Finally, the market-cap’s still quite small (relative to many other tech names). If the company can continue growing its revenue at 20-30% a year, I see no reason why the stock can’t double or triple in the years ahead.

Worth a look

Now, there’s no guarantee that revenue will continue growing at 20%-30% a year, of course. If there’s a slowdown in AI spending or a general economic drag, revenue growth could stall.

This scenario wouldn’t be good for the stock. Because it does have a high ‘priced-for-growth’ valuation today – currently the price-to-sales ratio (not price-to-earnings) is about 17.

I’m optimistic that growth will continue to be strong however. Because I expect more businesses to experiment with, and deploy, AI in the years ahead. I can see this company getting much bigger. So I think the stock’s worth a closer look today.

The post Move over Nvidia: here’s my new favourite AI stock appeared first on The Twelfth Magpie.

However, right now, I prefer another AI stock. It’s trading at a far lower valuation than Palantir and I think there’s more chance of its doubling in the years ahead.

A crazy valuation

There’s no doubt that Palantir is an amazing business. This is a data company that’s at the heart of the artificial intelligence (AI) revolution. And it’s growing at an incredible pace. Last quarter, for example, revenue was up 39% year on year to $884m.

I just can’t get my head around the valuation, however. Currently, the company has a market cap of around $361bn. Yet, this year, its sales are only projected to be about $3.9bn. So, we’re looking at a price-to-sales ratio (not price-to-earnings) of about 93.

That’s an eye-wateringly high sales multiple. And it adds a lot of risk for investors. For reference, Nvidia trades on a price-to-sales ratio of about 27. So, Palantir is far more expensive than that stock (which is generally considered to be expensive).

A cheaper AI stock

One AI stock that’s a fair bit cheaper than Palantir is Snowflake (NYSE: SNOW). It’s a data storage and analytics business.

It’s not growing quite as fast as Palantir. But it’s still growing at a prolific rate. Last quarter, product revenue came in at $996.8m. That figure was up 26% year on year.

Zooming in on the valuation, the market cap is $71bn while sales of $4.5bn are expected this financial year (ending 31 January 2026). So, we have a price-to-sales ratio of about 16. That’s still high. But I’m comfortable with it given the level of top-line growth.

Which stock will double first?

Comparing the two stocks, I reckon there’s more chance of Snowflake doubling in value in the medium term. If the strong growth continues (and it may not), I could see its market cap getting to $142bn in the next few years, especially if the company continues to improve its level of profitability.

I’m not sure Palantir can get to a market cap of $722bn in the coming years, however. For that to happen, sales growth would have to pick up materially and the valuation would have to climb even higher.

I’ll point out that I think there’s a chance that Snowflake could potentially play ‘catch up’ on Palantir in the years ahead. Since the two businesses became public companies in the second half of 2020, Palantir has generated far higher returns (1,500% for Palantir versus -10% for Snowflake).

I’m backing Snowflake

Now, of course, my predictions could turn out to be completely wrong. With these kinds of growth stocks anything can happen.

Snowflake, for example, could lose market share to competitors and see its growth slow and its share price fall. Alternatively, Palantir could see more interest from institutional investors, boosting its share price.

I reckon Snowflake is the safer bet today, however. That’s the stock I own and I believe it’s worth considering on pullbacks.

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Capitalising on the ‘Fourth Industrial Revolution’

Today, the world is experiencing an incredible technological revolution (sometimes called the ‘Fourth Industrial Revolution’). Driven by game-changing technologies such as cloud computing, robotics, and artificial intelligence (AI), the world is rapidly becoming more digital.

This trend is unlikely to end any time soon – the genie is well and truly out of the bottle now. To my mind, it’s exciting and a little scary at the same time.

Now, if there’s one sector that’s benefitting from this trend it’s software. Whether it’s business productivity, agentic AI, or cybersecurity software, it’s at the heart of this digital revolution and companies involved are growing rapidly.

So, I think this area of the market is going to throw up some amazing opportunities over the next decade as the world becomes more digital. I’m so bullish that I’m building my investment portfolio around the sector.

My software exposure

Indeed, today I have investments in nearly 20 different companies that are active in the software space. I’ve put them in the table below.

The majority of these stocks are US-listed. But there are few UK-listed companies in the mix including London Stock Exchange Group, Sage, Cerillion, and Gamma Communications.

Overall, they give me broad exposure to the Software sector. They also give me plenty of exposure to the digital revolution.

A top idea for the next 10 years

One stock on that list I’m really excited about is Snowflake. It offers data storage and analytics solutions via a software-as-a-service (SaaS) model.

This company is literally at the heart of the tech revolution. Because it helps companies sort and leverage their data.

For example, if a business wants to use AI to enhance productivity, it might turn to Snowflake to get its data structured properly (the first step when it comes to using AI). It can then use Snowflake’s range of AI solutions to gain powerful insights from the data.

Given its valuable data-based offering, Snowflake is growing quickly. Last quarter, for example, product revenue was $997m, up 26% year on year.

Net revenue retention rate was 124%. That means that existing customers are spending more.

Now from an investment perspective, there are risks of course. A downturn in spending from customers and competition from the likes of Amazon and Databricks are two worth highlighting.

The valuation is also lofty. So, investors need to be prepared for volatility.

I see a lot of potential here however, given the direction the world is heading in. In my view, the stock is worth considering on pullbacks.

The post Over the next 10 years, this area of the stock market could be a gold mine appeared first on The Twelfth Magpie.

A key player in the tech revolution

First up, we have ASML (NASDAQ: ASML). It’s one of the most important players in the semiconductor industry.

ASML specialises in lithography systems, which are used to produce computer chips. What sets this company apart from others though is that it’s the only manufacturer of Extreme Ultraviolet (EUV) lithography machines, which are used to produce the most advanced chips (needed for artificial intelligence and other emerging technologies).

Given its market position, it looks well placed for success in our increasingly digital world. As companies like Intel and TSMC build chip manufacturing plants in the years ahead, ASML should see high demand for its state-of-the-art equipment.

At present, analysts expect ASML to generate revenue and earnings per share growth of 15% and 23% respectively this year. That’s a decent level of growth.

As for the valuation, the forward-looking price-to-earnings (P/E) ratio is only 24 using next year’s earnings per share forecast. Looking at that valuation, I see growth at a reasonable price. Note that a few years ago, ASML had a P/E ratio in the 40s. So, the valuation has come down substantially recently.

A risk with this stock is that equipment orders can be lumpy at times. Like London buses, they sometimes go missing for a while before all arriving at once.

Another risk is import restrictions. These could have a short-term impact on growth.

Taking a five-year view however, I’m excited about the potential here. I expect ASML’s revenues and earnings to increase significantly in the years ahead.

An under-the-radar AI stock

Another company that could prosper as the world becomes more digital is Snowflake (NYSE: SNOW). It’s a data storage and analytics services provider that aims to help other companies achieve their full potential through data and AI.

This company is having a lot of success right now as businesses scramble to get their data organised (in order to take advantage of AI). Last quarter (ended 30 April), the company generated revenue of $1bn, up 26% year on year.

Note that at the end of the quarter, the company had 606 customers with trailing 12-month product revenue greater than $1m. When I first started covering Snowflake back in 2020, it had less than 70 of these customers.

One risk to be aware of with Snowflake is that profits are still small. This can lead to share price volatility at times (because it’s harder to value the stock accurately).

Another risk is competition from rivals such as Amazon and Databricks. Data is a competitive industry.

I see quite a bit of long-term potential here, however. It’s worth noting that since Snowflake’s recent earnings report, several brokers have raised their price targets to between $230 and $250 – a level significantly higher than today’s share price.

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