snowflake AI

Several tech companies are pivoting to generative AI to boost their growth prospects and Snowflake and Databricks are now facilitating customers to build custom generative AI models using the data on their platform.

While both Snowflake and Databricks are data companies they are now looking to help their customers build generative AI applications.

Both companies are holding summits this week to highlight their AI capabilities. Snowflake’s Summit 2023 is being held in Las Vegas between June 26 and June 29 where the company’s CEO Frank Slootman held a fireside chat with Nvidia CEO Jensen Huang about “Generative AI’s Impact on Data Innovation in the Enterprise.”

At the Summit, the two companies announced a partnership “to provide businesses of all sizes with an accelerated path to create customized generative AI applications using their own proprietary data, all securely within the Snowflake Data Cloud.”

“Snowflake’s partnership with NVIDIA will bring high-performance machine learning and artificial intelligence to our vast volumes of proprietary and structured enterprise data, a new frontier to bringing unprecedented insights, predictions and prescriptions to the global world of business,” said Slootman in his prepared remarks.

Notably, Nvidia is among the companies that are benefiting from generative AI as it is leading to higher demand for its high-end chips.

Nvidia’s market cap surpassed $1 trillion amid the AI euphoria and it joined the ranks of Apple, Amazon, Alphabet, and Microsoft. stock

AI stocks have seen upwards price action this year and – which is among the rare pure-play listed AI stock – has more than tripled this year.

Snowflake and Databricks Pivot to Generative AI

Meanwhile, Databricks is also holding its “Data + AI Summit” between June 26 and June 29. In its blog, it said, “Databricks took a pioneering approach with Unity Catalog by releasing the industry’s only unified solution for data and AI governance across clouds and data platforms.”

It added that its Databricks Lakehouse Monitoring service provides alerts for errors and quality issues in ML model pipelines and data.

The service includes the automatic classification as well as identification of personally identifiable information using AI-based data classification technology – a functionality it attributed to its Okera acquisition.

Both Snowflake and Databricks have been on an acquisition spree to boost their AI capabilities. Databricks has also announced the acquisition of MosaicML for a whopping $1.3 billion.

The company helps customers build generative AI tools using its own proprietary data and enhances Databricks’ AI capabilities.

Last month, Snowflake also announced the acquisition of Neeva which provides it with top-notch AI talent and a search tool. In 2022, Snowflake also announced the acquisition of Streamlit.

Global AI Funding Has Been Tepid Despite the Euphoria

While there is a global euphoria over AI and most tech companies are either investing in enhancing their AI capabilities or acquiring AI startups, the venture capital (VC) funding data tells a different story.

VC funding in artificial inteligence startups
Source: Crunchbase

Global AI venture funding plunged in Q1 2023 in line with the slump in the overall VC industry. According to Crunchbase, global VC funding into AI startups fell 43% YoY to $5.4 billion in the first quarter of the year.

However, in what looks encouraging for AI companies, Crunchbase noted that eight of the 38 unicorns in the first five months of this year are AI companies.

While generative AI has caught the attention of tech leaders, regulators globally are also scrambling to come up with enabling regulations to prevent fraud and protect data privacy.

Snowflake is Witnessing a Growth Slowdown

With the pivot to AI, tech companies are looking to shore up their growth. Snowflake for instance reported a revenue growth of 69.4% in the fiscal year that ended in January.

snowflake revenue growth
Source: Snowflake filings

The growth might sound impressive but is way below the 106%, 123.6%, and 173.9% revenue growth that Snowflake respectively reported in the previous three fiscal years.

Snowflake stock has also reacted to the slowing growth and is down over 50% from its November 2021 highs.

The stock has however seen upward traction over the last month – at least in part due to its AI pivot.

As for Databricks, the company’s revenues rose over 60% in the fiscal year that ended in January and surpassed $1 billion for the first time ever.

companies citing AI during Q1 2023 earnings calls
Source: FactSet

As the growth of their core data business starts tapering down, AI pivot looks like a prudent strategy for both Databricks and Snowflake.

AI has been the buzzword in the US corporate world and According to FactSet, 110 S&P 500 companies used the word “AI” in their Q1 2023 earnings call – which is over thrice the ten-year average and the highest level since 2010.

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