Yahoo Finance Snowflake CEO Is Seeking AI Deals in Battle With Databricks, Microsoft and Amazon
(Bloomberg) -- Snowflake Inc.’s new Chief Executive Officer Sridhar Ramaswamy is looking for deals in artificial intelligence to stay competitive with peers like closely held Databricks Inc. and the cloud computing giants.
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The data analytics provider was in talks to acquire startup Reka AI for more than $1 billion, but the discussions fizzled without a deal. Snowflake released its own large language model, Arctic, in April, and lets customers use LLMs from other companies like OpenAI on its platform. In May, Snowflake announced it would hire about 35 employees from AI-oriented startup TruEra, which last raised $25 million in 2022.
“We will be on the lookout for acquisitions opportunistically,” Ramaswamy said in an interview, adding that Snowflake will also work to hire top AI talent. “The number of people, in my opinion, that can train truly world-class foundation models right now is vanishingly small — I would say like a couple hundred people.”
Ramaswamy, a former Google executive and co-founder of search startup Neeva, became Snowflake’s CEO earlier this year. His chief task is to resuscitate revenue growth, which has been buffeted by tight corporate technology budgets. One part of the effort has been to invest in AI.
Still, investors have soured on Snowflake since sales growth rates have dropped from 69% in the year ended January 2023 to an estimated 24% in the current fiscal year, which ends in January 2025. The shares have plunged 31% this year, closing Monday at $136.93 in New York.
Competition with Databricks in certain areas means Snowflake needs to improve some functions, such as the ability to easily use data stored in different places, Ramaswamy said. Databricks has said sales of its data warehousing product, which goes head-to-head with Snowflake, jumped 200% in the previous year, ending 2023 at a $250 million annual revenue run rate.
“If you’re in the business of storing data and getting insights from it, we’re just a much easier and more pleasant way to do it as opposed to needing to stitch together multiple services in order to do the same thing,” Ramaswamy said when asked about competition with Databricks.
At Snowflake’s annual customer conference Tuesday, the company announced products to help users access and analyze data stored in more places. It is also expanding support for Iceberg, a data storage method first created by Netflix Inc., which has become more popular in recent years. “We’re sort of leaning into it very heavily because we think it’s what customers want,” Ramaswamy said.
Investors are primarily focused on Snowflake’s relevance in AI and competitive positioning against Databricks and cloud infrastructure giants like Microsoft Corp. and Amazon.com Inc.’s Amazon Web Services, Brad Zelnick, an analyst at Deutsche Bank, wrote before the conference. “We believe it will be important for management to address some of these topics and rightly or wrongly perceived threats head on.”
As for competition with the cloud providers, Ramaswamy said Snowflake’s products are better than comparable ones from Microsoft and Amazon, though their tools are “going to get better and so we need to keep improving our core product as well.”
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