Baron Funds, an investment management company, released its “Baron Opportunity Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund fell 11.97% (Institutional Shares), underperforming the Russell 3000 Growth Index, which fell 10.00%, and the S&P 500 Index, which declined 4.27%. The market is a confidence game. January saw a strong performance for the Fund, driven by investor optimism in technological innovation, particularly AI. Expectations of the Trump administration’s policies also fueled hopes for economic growth. However, by mid-February, sentiment shifted. Fears of tariffs, a potential global trade war, and geopolitical realignment reversed market gains, creating volatility similar to the COVID crisis or the Great Financial Crisis. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, Baron Opportunity Fund highlighted stocks such as Snowflake Inc. (NYSE:SNOW). Snowflake Inc. (NYSE:SNOW) offers a cloud-based data platform to support various organizations. The one-month return of Snowflake Inc. (NYSE:SNOW) was 4.38%, and its shares gained 67.49% of their value over the last 52 weeks. On June 18, 2025, Snowflake Inc. (NYSE:SNOW) stock closed at $212.08 per share, with a market capitalization of $70.762 billion.
Baron Opportunity Fund stated the following regarding Snowflake Inc. (NYSE:SNOW) in its Q1 2025 investor letter:
“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform that today is predominantly utilized by customers for data analytics. We re-established an investment in Snowflake during the quarter as the stock pulled back from mid-February highs on the broader market retreat and questions regarding the company’s CEO transition and AI competitiveness. Our confidence in Snowflake’s ability to capitalize on its substantial market opportunity has strengthened over the past year. We have been engaging with the company’s management for years, even prior to its public listing. During this quarter, we had the opportunity to meet again with Sridhar Ramaswamy, who assumed the CEO role last year. Despite his relatively short tenure, his influence on the company is evident. Snowflake’s pace of product innovation has significantly accelerated, enabling Snowflake to better address AI use cases. For instance, the platform now enables enterprises to harness a growing list of leading AI models, including those from OpenAI and Anthropic. Moreover, by integrating open table formats like Iceberg, customers can leverage Snowflake’s highly efficient query engine across data assets that are 100 to 1,000 times larger than the datasets currently stored on the platform. Meanwhile, customers continue to benefit from the platform’s core strengths, such as ease of use, strong governance, and data sharing.
Beyond product innovation, our confidence in the company’s go-to-market strategy has also strengthened. Management has made significant strides in aligning product and sales efforts, including adding technical-overlay teams to enhance product expertise within the company’s sales motion. Compensation schemes have been adjusted, and sales enablement efforts are in place to drive improvements both in acquiring new customers and expanding within existing accounts. Sales teams are now incentivized to drive use-case expansion and increased consumption among customers, which aligns more closely with Snowflake’s consumption-based revenue and pricing models, fueling continued business growth.
We believe Snowflake presents an attractive growth and investment opportunity, operating in a large and expanding data intelligence market that is poised to become a critical layer within an AI-centric ecosystem.”
A software engineer at work, surrounded by a wall of computer monitors connected to a ‘Data Cloud’ platform.
Snowflake Inc. (NYSE:SNOW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 94 hedge fund portfolios held Snowflake Inc. (NYSE:SNOW) at the end of the first quarter, which was 85 in the previous quarter. In the first quarter of fiscal 2026, Snowflake Inc.’s (NYSE:SNOW) product revenue increased 26% year-over-year to $997 million. While we acknowledge the potential of Snowflake Inc. (NYSE:SNOW) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Snowflake Inc. (NYSE:SNOW) and shared the list of best software stocks to buy. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of SNOW as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
