Buying Opportunities
Snowflake, Salesforce, and Gilead Sciences
In my experience, whenever the word “Straits of Hormuz” comes up, it is usually a buying opportunity. Neither Israel nor the US has the resources to perform a ground invasion, so this will be a limited bombing campaign. However, the situation can take a while to resolve itself. We have to see how the market reacts when it opens tomorrow.
Let’s continue to put some fair value estimates on various companies and use them as a yardstick if we get a knee-jerk reaction downwards in the next week. Maybe cheap can get even cheaper, or expensive suddenly gets fair.
Snowflake
SNOW is down 23% this year. This has been somewhat unfair. SNOW is not a software company per se; it is a data storage company, which predominantly sells data lake solutions to its customers. Yes, SNOW has software applications that help their customers search and compile unstructured data, but it isn’t the main part of the business. The lakes themselves are the protagonists. In the AI age, enterprises will need solutions compatible with AI applications, and functional data lakes make it so much easier on almost every level. So, the emergence of AI creates tailwinds for SNOW, not headwinds.
SNOW’s sales growth confirms this. Last year, SNOW grew revenues by 29% and has guided around the same this year. Profit margins are also expanding at a healthy clip and are projected to reach 12% in this fiscal year. This profit level makes it cash flow positive on a GAAP basis. In other words, SNOW is on a roll, and this is why I raise my fair value estimate by $25 to $225 per share. Today, SNOW trades at $168, so the upside here is substantial if my take is right.
Salesforce
There is almost no point in discussing CRM’s results. Here it comes down to what you believe. If you believe in Mark Benioff and that CRM will do $63 billion in sales by the end of the decade, then CRM is worth $350 in my DCF. However, if you believe in all the doom porn, CRM is on its way to the scrap heap of history.
CRM’s management does its best to convince us that Agentforce works. They point out that Agentic AI subscriptions are experiencing explosive growth. And if one adds in the data cloud service, which is inextricably linked to agents, AI subscriptions run at $2.9 billion in ARR. This represents 7% of the total revenue. CRM has also broken down how many tokens its customers consume, and this usage is growing by 50% quarter over quarter.
I don’t believe in much of the doom porn. I want to point out that Anthropic, so far, has only produced some plug-ins that aren’t very useful without software running in the background. I also know so much about business and computer science that I know for a fact that it is practically impossible to vibe code Slack, Mulesoft, Tableau, or other features in CRM’s portfolio. Anyway, why should businesses hire 30 software engineers to code a replacement for either Slack or Microsoft Teams when they already have working software? Likewise, the mass displacement of knowledge workers seems far-fetched. Rather, when workers can spend less time on technical-mechanical tasks, they can concentrate on tasks that create more value. In due course, new job titles will emerge, and many of these will represent a societal value-add. Followingly, workers will get higher salaries, and in the end, we will all be richer. Technology moves us up in the value stack, not down.
Naturally, there will be changes, but the transition will take much longer to unfold than what the doomer’s scare us with. And in due time, there might be changes to CRM’s pricing model, but we also have to factor in possible positive externalities. CRM will have ample time to make adjustments, and Mark Benioff isn’t exactly a dummy. He is also quite amusing. On the latest earnings call, he expressed regret over not investing more heavily in Anthropic. He said that if he’d foreseen that it would take over the world, he would have committed far greater resources. Today, CRM owns 1% of Antropic.
Gilead Sciences
GILD has gone 2x since I recommended it in 2024. GILD’s final 2025 report was uneventful in my eyes, confirming what I’d expected beforehand. HIV and liver disease are strong categories. GILD’s HIV franchise grew revenues by 6% year-over-year (YOY), while liver disease grew 17% YOY.
More exciting is GILD’s acquisition of Arcello for $7.8 billions. This acquisition can potentially give GILD a leadership position in cell therapy. Arcello’s drug portfolio has especially shown excellent clinical results in anito-cell therapies. These clinical trials have targeted relapsed/refractory multiple myeloma, an area with high unmet need. Arcello has also developed next-generation CAR-T, bispecifics, and in vivo therapies in oncology and inflammation. However, these capabilities are only on a pre-clinical level.
GILD expects the acquisition to become accretive from 2028. The present growth trajectory and the acquisition give me room to adjust my financial projections upwards. Consequently, I raise my fair value estimate by $30 to $155 from $125. At $149, GILD is fairly valued in the market.
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The information in this blog is for educational purposes only, not financial advice. Investing in stocks carries risks; past performance doesn’t guarantee future results. Conduct thorough research and seek advice from financial professionals before investing.
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