Snowflake, the buzzy cloud computing company, just delivered the biggest software IPO ever by betting on a future in which all businesses increasingly rely on big data and AI to make decisions. Its stock began trading on Sept. 16 at $245 per share—more than double the $120 price Snowflake set the day earlier—giving it an opening valuation of $67.9 billion.
The startup’s main value proposition is that it makes it easier and cheaper for businesses to analyse data they’ve shelved away on the cloud—including the massive datasets needed to train machine learning algorithms.
But as businesses are increasingly adopting AI to inform their strategies and automate everything from resume review to ER triage, a string of high-profile scandals has made corporate executives think twice about their use of big data. Shifting public opinion, new government regulations, and the cost of compliance could change companies’ calculus about AI—and send Snowflake’s valuation drifting back down to Earth.
- Due to the way it structures its software, Snowflake can challenge cloud powerhouses like Amazon’s AWS and Microsoft’s Azure through its ability to run high compute AI programs more efficiently.
- Snowflake’s computing power can store and analyse data separately and, using a separate system, dedicate more or less resources to each depending on the demand. It charges clients for the exact amount of storage and computing power they require.
- AWS, conversely, doesn’t divide its data storage and analysis, so customers might pay for unused computing power to analyse the data.
- Snowflake’s $3.4b is the largest amount raised in a U.S. IPO since Uber’s $8.1b in May 2019. It has reported increased revenue for the last eight quarters, and revenue increased by 174% YoY in the last fiscal year.