Snowflake, Salmar, and Palo Alto
And some macro stuff
Next week, the blog will drop later on Sunday due to travel.
This week’s blog post covers Snowflake, Salmar, and Palo Alto Networks. Before diving into these names, I comment on Trump’s tax cuts and share an update on my trading activity.
Whistling past the graveyard
This week, we got a clearer picture of what the “Big and Beautiful Bill” will look like. The House of Representatives extended the Tax Cuts and Job Act (TCJA) from Trump’s first term and added roughly $100 billion in new annual tax cuts. The bill now moves to the Senate, where observers expect the senators to revise parts of the additional tax cuts to TCJA passed in the House. Ultimately, both chambers must reconcile their versions. Thus, it looks safe to assume that the final law will raise the deficit between $350 - $400 billion annually.
Bond investors are increasingly concerned about the sustainability of U.S. fiscal policy, especially after Moody’s downgraded the U.S. credit rating, citing persistent deficits and growing interest costs. Analysts warn that if the tax cuts pass in their current form, yields could rise further—potentially past 5% on the 10-year Treasury—raising borrowing costs across the economy and risking a negative feedback loop for government finances.
So far though, increases in the 10-year Treasury yield have been muted, and I don’t expect any wild swings in interest rates due to the projected tax cuts. We must remember that the world needs the U.S. dollar and American assets are still among the most profitable global investors can own. America will, therefore, have no problem with attracting capital. Deficits matter, but simultaneously, the U.S. has more fiscal freedom to maneuver than other countries due to the dollar's status as a global reserve currency. The deficit will become a greater problem if American enterprises lose their exceptional margins, and in the short term tax cuts should be positive for profits.
You can accuse me of being pollyannish and whistling past the graveyard. However, in the short term, I am far more worried about the inflationary impact of Trump’s tariff policies than the consequences of budget deficits. And certainly, regarding tariffs, we must also remember that Trump’s proposed tariffs will bring in revenues weighing up for tax cuts.
Overall, Trump’s economic policies are mixed in growth terms, but I would rate them as modestly pro-growth. While tariffs are negative, the “Big and Beautiful Bill” includes several provisions likely to boost growth. In particular, tax cuts on overtime pay and a lighter tax burden for small and medium-sized businesses should incentivize investment and hiring, making these measures especially supportive of economic growth.
What I do in the market these days
Last week, I didn’t do much concrete. Currently, I have 16 names in my portfolio of individual stocks. I am pondering what to do with Merck and Pure Storage. These two names constitute small positions and have stayed dormant in my portfolio for a while now. There is no point in owning small positions that I don’t intend to buy more of, so these will likely end up on the chopping block soon. As a substitute, I need to find a new quality compounder, a stock I can put high conviction behind. My goal is to have a maximum of 15 companies in the portfolio. Sometimes, I go over this threshold, and sometimes below, it’s not an absolute fixation. What to buy? - I work with several names.
Snowflake
SNOW is now a $200 stock, up nearly 10% since the Q! 2025 earnings release.
The company reported revenue of $1.04 billion, a 26% year-over-year (YoY) increase, surpassing analyst estimates and marking the first time the company exceeded $1 billion in quarterly sales. The management team raised the product revenue outlook to $4.33 billion annually, above its prior guidance and Wall Street consensus. Guidance for the next quarter also exceeded analyst expectations.
Every organization struggles with silos, and there is no AI strategy without a data strategy. SNOW provides data lakes as a single foundation to eliminate silos, connecting all users and all workloads upon unified data within an enterprise. The total addressable market (TAM) can be over $300 billion for companies that enable organizations to store, process, analyze, and share data at scale in the cloud through a platform as a service (PaaS) framework.
SNOW's primary competitors are other major cloud data warehouses and analytics platforms. The most widely recognized competitors include: Amazon Redshift (AWS), Google BigQuery, Microsoft Azure Synapse Analytics, and Databricks.
Given the company’s robust forward guidance, I am raising my fair value estimate by $20 per share, bringing it to $200. Alas, the market is in alignment with my valuation.
Salmar
SALM reported a weak Q1, with operational EBIT down 48% YoY to NOK 798 million and revenues falling 21% to NOK 5,193 million. The company posted a net loss of NOK 355 million, a sharp reversal from a NOK 821 million profit in Q1 2024. A high proportion of downgraded fish impacted financial performance.
SALM is down approximately 10% in the days following the earnings release.
To SALM’s benefit, the management had prepared the market for weak Q1 results by emphasizing their strategic focus on building biomass rather than maximizing harvest volumes. They communicated that late harvesting, a high proportion of downgraded fish, and lower average weights would negatively impact earnings, but would support higher volumes later in 2025.
With this as a background, it becomes explainable why SALM kept its guidance for 2025. SALM expects harvest volume to reach 294,000 tonnes in 2025, representing a 17% increase from 2024.
Despite analyst downgrades, I maintain my NOK 650 fair value for SalMar, as production guidance remains unchanged. While this target assumes higher salmon prices than we have today, I prioritize volume growth over price volatility in my analysis. Ultimately, increased harvests will drive value, even if prices fluctuate. Over the long term, focusing on harvest growth makes the intrinsic value analysis less sensitive to biological risks, short-term price swings, and market turbulence.
Palo Alto Networks
PANW’s earnings report for the fiscal third quarter of 2025 got a negative market reaction. Despite delivering revenue and adjusted profit that slightly exceeded consensus expectations, driven by a 15% year-over-year revenue increase and strong growth in next-generation security offerings, investors were disappointed by the company’s guidance and growth indicators.
PANW’s guidance for future revenue growth (14–15% for the next quarter) and a 19% increase in remaining performance obligations (RPO) were seen as modest, raising concerns about the sustainability of growth.
My take on the earnings is as follows: First, cybersecurity remains a secular growth industry, attracting significant investor interest and making it difficult to find reasonably valued companies within the sector. Second, PANW has experienced a deceleration in growth; two years ago, its revenue was increasing at a 25% YoY rate, but today, sales growth struggles to exceed 15% YoY. Finally, while investor expectations have become somewhat more realistic in light of these trends, they remain elevated, reflected by PANW still trading only about 10% below its all-time high.
Hence, the nimbus of being involved in a strong sector must be paired with observable facts about individual companies. PANW isn’t stronger than the results it produces, and the numbers speak for themselves; a stock price above $200 requires revenue growth close to 20% YoY. PANW is not near this level, and is, therefore, overvalued here. My fair value estimate remains the same as before the quarterly results and stands at $155 per share.
Disclaimer: Important Information for Retail Investors
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.
The author is a retail investor, not a licensed advisor. Due to changing market conditions, content accuracy isn't guaranteed. All investments have risks, including the potential loss of principal. Assess your risk tolerance and goals before investing; diversification is key to managing risk.
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