Chapter 1: What are the highlights of Snowflake's latest financial results?
Snowflake has a hot new product. This is Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm Jon Kloss filling in today for Tyler Crowe. That means that Travis Hoyum is filling in for me along with the Fool contributor, Matt Frankel.
Musical chairs over here.
That's all right. Listen, we have some news here for real estate and some acquisition news we're going to get to. But first, let's talk about Snowflake because this is an $80 billion company and it's up a whopping 37% today. This, of course, the data management and analytics software company.
Chapter 2: How does Snowflake's new AI product, Cortex Code, enhance its offerings?
And this was the hot thing when it first went public. And it is down about 50% from its all-time high way back in 2021. This company was known for incredible growth rates, but the growth rate was just steadily declining. But here in this quarter, revenue all of a sudden jumped to 33% growth and management raised its guidance for the year.
So all of a sudden we see a little bit of, wow, growth is maybe picking back up again for Snowflake. And what is interesting here is that the analysts were really curious, what is driving this surprise growth? And Snowflake's management crediting a new product that it launched during the quarter called Cortex Code or COCO. And that is what is really interesting. accelerating things here.
So Travis, I just want to throw it to you. What is Coco and why do Snowflakes customers like it so much?
Well, this is their native coding agent. And in artificial intelligence today, coding and using AI for coding is kind of all the rage right now. So it's operating in plain language, gets a request, and then does work for the user. I think what kind of differentiates it for Snowflake is it lives inside Snowflake, so it can access all of the data that a business has on Snowflake.
And in theory, that should make life a lot easier for developers, building agents, which is another one of those hot words in the market and other tools. I'll note that this is the kind of thing that almost every cloud company, you know, the big hyperscalers are starting to launch.
So I don't know that this is necessarily a long term differentiator, but at least short term, this is the kind of thing they got to put out.
Well, it's interesting that you say that. I do want to double down here a little bit with this Cocoa product.
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Chapter 3: What factors are contributing to the decline in mortgage refinancing?
You know, these AI tools from Snowflake, these are what are driving the growth, but these are actually a little bit lower gross margin. Snowflake is known for an incredible gross margin, but these tools a little bit lower on the gross margin side. And what is also interesting is Snowflake doesn't own all of its compute. It relies on this from third parties, the cloud computing providers.
And so when you're scaling with these AI tooling that are living in these cloud computing giants where maybe you don't control the cost, that is kind of an interesting thing. So I know you, Travis, are always talking about business models. And so when you think about the business models here, where do you want to be?
Snowflake is such an interesting company to look at because there's the story of the company and then you start to look at the financials and that's where the business model has to show up in the numbers. And I think you look at their income statement is one of the strangest that I've ever looked at because it's...
Chapter 4: How do rising mortgage rates impact the housing market?
incredibly long because they break out all these non-gap numbers and then gap numbers. If you're not familiar with gap, gap is generally accepted accounting principles. If you're saying that your numbers are, you're profitable non-gap, God, that's great. But the generally accepted accounting principles say that you're very, very unprofitable.
And the reason is they're spending a lot of money on compute. They just signed a $6 billion deal with AWS. They're using Amazon's custom chips. So who has the power in that relationship? It certainly seems like Amazon to me because Snowflake is not profitable, whereas AWS is.
It's not only the compute cost, right?
Chapter 5: What companies are affected by the slowdown in refinancing?
It's also the stock-based compensation that's coming in here at 400 million in the most recent quarter, 29% of revenue. So that is definitely something to watch. But Matt, I'm going to let you have the closing thought here. We're going to loop you into the conversation. Do you agree with Travis here that you'd rather be on more of the hyperscaler side of the equation?
Or do you really like a company like Snowflake in this situation?
Travis makes a really good point on Snowflake's profitability or the lack thereof. And in full disclosure, I own Amazon in my portfolio. So there's a big case to be made for the hyperscalers. But I really can't deny that Snowflake's numbers look impressive.
Chapter 6: What is the significance of Fertitta Entertainment's acquisition of Caesars Entertainment?
I mean, net revenue retention at 126% is something that's becoming more and more rare in the software space. The Amazon deal shows that Snowflake is seeing massive and long tail demand for its data products. And most importantly, the numbers are really showing that AI is becoming a tailwind, not a disruptive force for the business.
So like I said, there's certainly a good case to be made for buying a hyperscaler, but I think I'd be inclined to take a closer look at Snowflake here. It gives you pure play exposure to the enterprise data space. Its revenue is growing faster than any of the big three, AWS, Azure, and Google Cloud. It's definitely a high risk, high reward play compared with owning any of the hyperscalers.
But after these results, I would consider a starter position in my portfolio in Snowflake.
Yeah, I think that Travis's point about the adjusted and the unadjusted numbers for Snowflake are well taken. But I agree with Matt here in the sense that anytime I see an accelerating growth rate, I want to make sure I take a long, hard look.
Chapter 7: How does the Caesars deal affect VICI Properties?
So we'll be taking a look at Snowflake in the weeks and months ahead. But after the break, we are going to talk about a huge component of the economy that's hitting a brick wall. You're listening to Motley Fool Hidden Gems Investing. Welcome back to Motley Fool Hidden Gems Investing. So we got some news today and it has to do with mortgage refinancing. It's actually dropped an incredible 18%.
That looks like a lot to me, but Matt here is our more expert when it comes to the mortgage and refinance space. So I wanted to bring him in here and ask, maybe you can contextualize this drop in refinancing for us and then also kind of talk about the things that it would impact.
Yeah, it's a large drop, you're right, but it's not a surprising one. The average 30-year mortgage rate is up to 6.65%.
Chapter 8: What hidden opportunities exist in the current market landscape?
That's up nine basis points since last week. That's up 30 basis points over the past five weeks. And it's making a big difference in the economics of refinancing. It's just not worth it for as many people anymore. It's important to note though, that the 18% drop refers to a, compared with last week, compared to a year ago, it's still up 19% refinancing volume.
So refinancing, it's only one side of mortgage data, right? So purchase mortgages were actually up 5% year over year and just down very slightly from last week. But these are both from very low starting points. The real estate market in general has been very, very slow for about three years now. Rates dipped briefly below 6% in February, and that really kind of made mortgage activity spike.
But the Iran war, the rising inflation we've been seeing are both causing rates to rise. At the start of the year, it was generally expected that this would be the most robust year in real estate in several years and in the refinance market. But that isn't exactly happening because rates have gone up considerably.
I know we're a show about stocks. We're not a show about refinancing mortgages, but I mean, this does affect stocks, right, Matt? This isn't something that is completely uncorrelated.
Yeah, I mean, the short version is that this, over the past couple months, has put pressure on any stocks relating to housing or mortgages or refinancing. Homebuilders have more than 500,000 unsold homes in their inventory. That's the most since the financial crisis days. It's giving them the reason to use more incentives to sell homes, which hurts margins.
They have the added carrying costs of keeping those homes on their balance sheet for longer than expected. Lenders like Rocket Companies, which, I mean, refinancing was their bread and butter back in the pandemic days when rates were 3%. They're seeing lower loan volumes than they had expected earlier this year.
And mortgage lending has been a nice catalyst for fintechs like Upstart and SoFi, both of which are focused on the refinancing side, specifically the home equity line of credit side. It's not providing as much of a growth tailwind as it was at the end of 2025 and beginning of this year. So it's affecting a lot of stocks that are in those industries.
Yeah, and this is going to be something that's going to be across a number of different spaces. So we could talk about companies like Zillow or Compass, which are going to be more on the real estate side. That's going to be purchasing homes, whether it's new homes or existing homes. The... Headwinds that higher mortgage rates face for the economy is just really, really broad based.
And the other thing I think we need to think about, too, is this is a really big piece of the economy. You know, people are there are a lot of people who work in the construction industry and higher rates are going to make it harder for people to refinance, to do that, you know, upgrade to your home, maybe upgrade your kitchen or your bathroom.
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