To fulfill its mission of making the world smarter, happier, and richer, The Motley Fool, a financial services company established in 1993, reaches a wide audience through various channels. These include premium investing solutions, comprehensive market analysis on Fool. com, highly rated podcasts, and The Motley Fool Foundation, a non-profit organization. By offering diverse services and resources, The Motley Fool aims to empower individuals with knowledge and guidance to make informed investment decisions. For readers seeking additional insights and exclusive content, becoming a Motley Fool member provides instant access to top analyst recommendations, in-depth research, and other valuable investing resources. Learn More Renowned investor Warren Buffett, known for his interest in U. S. consumer-related ventures, has invested in a range of consumer-focused and financial stocks through his holding company, Berkshire Hathaway. However, Berkshire's holdings are not limited to consumer-oriented companies, as it also owns a significant stake worth $1. 2 billion in Snowflake, a data cloud company, deviating from its usual investment portfolio. Despite trading 50% lower than its peak, Snowflake holds the potential to become one of Berkshire's most lucrative investments in the future. Investors should consider buying and holding this stock for the long term due to Snowflake's anticipated role in the growth of artificial intelligence (AI) over the coming decades. AI has garnered considerable attention recently, with OpenAI's AI-powered chatbot ChatGPT being one example of its capabilities. However, understanding the inner workings of AI models requires delving deeper. The effectiveness of AI relies heavily on vast amounts of data used to train its models, making data a vital component. Obtaining and managing data can be complex for many organizations. Snowflake, a data cloud platform, offers a solution by allowing organizations to securely store their data in the cloud. Users can search, analyze, and manipulate the data to suit their needs. To address data quality issues, Snowflake integrates with various third-party applications for data modification and cleanup. Additionally, Snowflake's marketplace enables users to share or purchase third-party data. In short, Snowflake assists companies in building, securing, storing, and utilizing the data they require.

For investors, data represents a significant long-term opportunity, given its exponential growth. Approximately 90% of the world's data has been created in the past two years alone, reflecting the increasing digitization of the world and the growing online population. Since data persists and accumulates without expiring, the potential for data growth in the next five, ten, or twenty-five years is staggering. Snowflake's customer-centric approach, billing customers based on usage, offers control over storage and computing needs, which is particularly appealing. Additionally, Snowflake's impressive net revenue retention (NRR) rate of 135% exhibits strong revenue growth without factoring in new customers. With just over 8, 900 customers currently, Snowflake has significant room for expansion, considering that there are over 300 million businesses globally. If Snowflake can capture even 500, 000 of these businesses over time, its growth potential could extend for decades. As a financially sound company, Snowflake generates over $2. 6 billion in annual revenue, with 24% of that converting into free cash flow. This provides ample resources for investment in growth initiatives, acquisitions, or share repurchases. Analysts project an average of 61% annual earnings growth for the company over the long term. However, it is worth noting that Snowflake's current stock valuation is relatively high, with a forward P/E ratio of 255 and a PEG ratio above 4. Despite this, given the company's exceptional growth potential, long-term investors may still find it an attractive opportunity. Investing in Snowflake using a dollar-cost-averaging strategy, where shares are purchased gradually over time, allows participation in the market even if the stock remains expensive. Furthermore, it allows for additional purchases should the stock eventually become more attractively priced. The Ascent, a Motley Fool company, and Bank of America are partners in advertising. Justin Pope has no positions in the mentioned stocks. The Motley Fool holds positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Snowflake. The Motley Fool maintains a disclosure policy.