Snowflake Has a Hot New Product

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Jon Quast, Matt Frankel, and Travis Hoium discuss:

• Snowflake’s latest quarter.
• Cloud computing versus AI software.
• Plunging demand for mortgage refinancing.
• Caesars’ sale to Fertitta Entertainment
• The sneaky potential benefit to Vici Properties.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on May 28, 2026.

Jon Quast: Snowflake has a hot new product. This is Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm Jon Quast, filling in today for Tyler Crowe. That means that Travis Hoium is filling in for me, along with the Fool contributor Matt Frankel.

Travis Hoium: Musical chairs over here.

John Quast: That's all right. Listen, we have some news here for real estate, and some acquisition news we're going to get to. But first, let's talk about Snowflake because this is an $80 billion company, and it's up a whopping 37% today. This, of course, the data management, and analytics software company and this was the hot thing when it first went public, and it is down about 50% from its all-time high. Way back in 2021, this company was known for incredible growth rates, but the growth rate was just steadily declining. But here in this quarter, revenue all of a sudden jumped to 33% growth, and management raised its guidance for the year. All of a sudden, we see a little bit of growth is maybe picking back up again for Snowflake. What is interesting here, is that the analysts were really curious what is driving this surprise growth, and Snowflake's management crediting a new product that it launched during the quarter called Cortex Code or Coco. That is what is really accelerating things here. Travis, I just want to throw it to you. What is Coco, and why do Snowflake's customers like it so much?

Travis Hoium: Well, this is their native coding agent. In artificial intelligence today, coding, and using AI for coding is all the rage right now. It's operating in plain language, gets a request, and then does work for the user. I think what differentiates it, for Snowflake is it lives inside Snowflake, so it can access all of the data that a business has on Snowflake. In theory, that should make life a lot easier for developers building agents, which is another one of those hot words in the market, and other tools. I'll note that this is the thing that almost every Claude company, the big hyperscalers are starting to launch. I don't know that this is necessarily a long-term differentiator, but at least short-term, this is the thing they got to put out.

Jon Quast: Well, it's interesting that you say that, I do want to double down here a little bit with this Coco product. These AI tools from Snowflake, these are what are driving the growth, but these are actually a little bit lower gross margins. Snowflake is known for an incredible gross margin, but these tools a little bit lower on the gross margin side. What is also interesting is Snowflake doesn't own all of its compute. It relies on this from third parties, the Claude computing providers. When you're scaling with these AI tooling that are living these Claude computing giants where maybe you don't control the cost, that is an interesting thing. I know you, Travis, are always talking about business models. When you think about the business models here, where do you want to be?

Travis Hoium: Snowflake is such an interesting company to look at because there's the story of the company, and then you start to look at the financials, and that's where the business model has to show up in the numbers. I think you look at their income statement is one of the strangest that I've ever looked at because it's incredibly long because they break out all these non-GAAP numbers and then GAAP numbers. If you're not familiar with GAAP, GAAP is Generally Accepted Accounting Principles. If you're saying you're profitable, non-GAAP, God, that's great. But the generally accepted accounting principles say that you're very unprofitable. The reason is they're spending a lot of money on compute. They just signed a $6 billion deal with AWS. They're using Amazon's custom chips. Who has the power in that relationship? It certainly seems like Amazon to me because Snowflake is not profitable, whereas AWS is.

Jon Quast: Not only the compute cost, it's also the stock-based compensation that's coming in here at 400 million in the most recent quarter, 29% of revenue. That is definitely something to watch. But, Matt, I'm going to let you have the closing thought here. We're going to loop you into the conversation. Do you agree with Travis here that you'd rather be on more of the hyperscalar side of the equation, or do you really like a company like Snowflake in this situation?

Matt Frankel: Travis makes a really good point on Snowflake's profitability or the lack thereof. In full disclosure, I own Amazon in my portfolio, so there's a big case to be made for the hyperscalars, but I really can't deny that Snowflake's numbers look impressive. Net revenue retention at 126% is something that's becoming more, and more rare in the software space. The Amazon deal shows that Snowflake is seeing massive and long-tail demand for its data products. Most importantly, the numbers are really showing that AI is becoming a tailwind, not a disruptive force for the business. Like I said, there's certainly a good case to be made for buying a hyperscalar, but I think I'd be inclined to take a closer look at Snowflake here. It gives you pure play exposure to the enterprise data space. It's revenues growing faster than any of the Big 3: AWS, Azure and Google Cloud. It's definitely a high-risk, high-reward play, compared with owning any of the hyperscalars. But after these results, I would consider a starter position in my portfolio in Snowflake.

Jon Quast: I think that Travis' point about the adjusted, and the unadjusted numbers for Snowflake are well taken, but I agree with Matt here in the sense that anytime I see an accelerating growth rate, I want to make sure I take a long hard look, so we'll be taking a look at Snowflake in the weeks, and months ahead. But after the break, we are going to talk about a huge component of the economy that's hit a brick wall. You're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing. We got some news today, and it has to do with mortgage refinancing. It's actually dropped an incredible 18%. That looks like a lot to me, but Matt here is our more expert when it comes to the mortgage, and refinance space. I wanted to bring him in here, and ask. Maybe you can contextualize this drop in refinancing for us, and then also talk about the things that it would impact.

Matt Frankel: It's a large drop. You're right, but it's not a surprising one. The average 30-year mortgage rate is up to 6.65%. That's up nine basis points since last week. That's up 30 basis points over the past five weeks. It's making a big difference in the economics of refinancing. It's just not worth it for as many people anymore. It's important to note, though, that the 18% drop refers to compared with last week, compared to a year ago, it's still up 19% refinancing volume. Refinancing, it's only one side of mortgage data. Purchase mortgages were actually up 5% year over year and just down very slightly from last week. But these are both from very low starting points. The real estate market in general has been very slow for about three years now. Rates dipped briefly below 6% in February, and that really made mortgage activity spike. But the Iran war, the rising inflation we've been seeing, are both causing rates to rise. At the start of the year, it was generally expected that this would be the most robust year in real estate in several years, and in the refinanced market. But that isn't exactly happening because rates have gone up considerably.

Jon Quast: I Know we're a show about stocks. We're not a show about refinancing mortgages, but this does affect stocks, Matt? This isn't something that is completely uncorrelated.

Matt Frankel: The short version is this over the past couple of months has put pressure on any stocks relating to housing or mortgages or refinancing. Homebuilders have more than 500,000 unsold homes in their inventory. That's the most since the financial crisis days. It's giving them the reason to use more incentives to sell homes, which hurts margins. They have the added carrying costs of keeping those homes on their balance sheet for longer than expected. Lenders like Rocket Companies, which, refinancing was their bread, and butter back in the pandemic days when rates were 3%. They're seeing lower loan volumes than they had expected earlier this year. Mortgage lending has been a nice catalyst for fintechs like Upstart, and SoFi, both of which are focused on the refinancing side, specifically the home equity line of credit side. It's not providing as much of a growth tailwind as it was at the end of 2025, and beginning of this year. It's affecting a lot of stocks that are in those industries.

Travis Hoium: This is going to be something that's going to be across a number of different spaces. We could talk about companies like Zillow or Compass, which are going to be more on the real estate side, that's going to be purchasing homes, whether it's new homes or existing homes. The headwinds that higher mortgage rates face for the economy is just really broad-based. The other thing I think we need to think about too, is this is a really big piece of the economy. There are a lot of people who work in the construction industry, and higher rates are going to make it harder for people to refinance, to do that upgrade to your home, maybe you're to upgrade your kitchen or your bathroom. There's going to be a huge flow through in the economy, and I think that's going to be just a headwind for a number of different industries, even yes, home builders, yes, mortgage companies, but it's also going to be consumer spending that we're going to have to watch.

Matt Frankel: I like that you bring up the other industries. I've mentioned companies like Trex that sells decking, big projects like that are often paid for by refinancing mortgages. People tap into their home equity to do that. Home Depot's been saying this on their conference calls for the past three years that they're seeing people put off big projects. I like that you brought that up that it's not just the housing stocks. It's not just the lending stocks. Pretty much anything anyone who sells things that could be used in homes is feeling the effects of this, as well.

Jon Quast: Probably some even pent-up demand there that eventually, when the mortgage pre-financing economy gets better, might lead to some nice gains for some of these stocks that are depressed right now. After the break, we are looking at some things that are hidden under a massive $12 billion acquisition. You're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing. We do want to make you part of the conversation on this show. If you have a stock or an investing question for any of us who are regular hosts here, you can email them to us, and you can email them to us at podcast@fool.com. We'd love to have your questions. We'd love to read them on air. Just keep them Foolish. Keep them short enough that we can read them. That's always appreciated. That email, again, is podcast@fool.com.

We'd actually normally do a mailbag segment here, but we're going to skip that today because we wanted to talk about Caesars Entertainment. This is the owner of Horseshoe and Harris properties. It has agreed to terms Fertitta Entertainment to be acquired for about $31 per share or about $12 billion in all. Travis, you followed this company for a long time. Let us know how we got here.

Travis Hoium: Caesars was the old Harrah's Entertainment. That was the first time I owned the stock in the early to mid-2000s. That was bought out, eventually went bankrupt. A really strange history that this company has, but I think the real story here is that the gaming industry has gone from being a very capital-intensive, high-debt industry. That was how Las Vegas was built, junk bonds. That's where they became popularized. That's how you build Caesars Palace. That's how you build the Bellagio, but now that build-out is largely over. These businesses are now cash flow machines, and that's what Fertitta is buying. Caesars generated $3.6 billion worth of adjusted EBITA has a proxy that we use in the gaming industry for cash flow. If you're getting it at the right price, that can be really attractive to have that cash flow.

I question that this is the right price. The final agreement, and that's what we're talking about here. This deal was announced a couple of months ago, but they've actually come to terms, and $11 billion in debt, plus rent obligations, plus the equity that you're buying. This is a very highly leveraged deal. The last time that Harrah's, and Caesars Palace went through this, they did end up in bankruptcy court, very convoluted process in bankruptcy court. But the thing that I think that we could potentially take from this is there are companies out there that have really good cash flow businesses that the market is just completely overlooking right now with all the fervor around artificial intelligence, and semiconductors, and memory stocks, and all of these things. There are really good cash flow businesses with really big moats. People aren't just building casinos on the Las Vegas strip, willy-nilly. These are really good assets that Fertitta’s buying.

I'll point out a company that I own, and have been buying for a while, MGM Resorts, they have a $10 billion market cap, only about $4 billion in net debt, and $5 billion in adjusted EBITA. One of the things their management talks about constantly, and they've been buying back about 15% of their shares annually. But management continues to talk about look, if you strip out these assets, some of them that are publicly traded, like their assets in Macau or the 50-50 partnership that they have with NTN for BetMGM, you take those out. Our core business trades for 3.5 to four times adjusted EBITA. That is a crazy low multiple for a business that, yes, there's some slight declines in Las Vegas, but these are cash flow machines now. I look at the Las Vegas strip in the casino industry right now, more like an ATM than it is like a money sink like it was 20 years ago. This is really compelling, and if you're looking for takeaway, I think there's going to be what we would call a re-rating of some of these stocks that have really good cash flows that are maybe just overlooked by the market right now.

Jon Quast: Well, I love that you went there, Travis, that we can take this deal. It's a done deal, and there's really not anything actionable for investors on the Caesars Entertainment side of things, because it's basically trading where the buyout offer is. But you're taking that and saying, look at these other resorts that are maybe relatively undervalued based on what this company was just acquired for, maybe even higher quality assets. I love that you went there, but there's more to this than just what you just pointed out, Travis. As Matt was pointing out before the show, there may be even some hidden elements here that are in the Caesars deal that we should pay attention to.

Matt Frankel: I love how Travis brought up the Caesars bankruptcy, and they're not the only one. The casino business has historically been a tough one. I never understood. It’s a business where people literally walk in and give you their money; essentially, it’s so hard to be successful. You won't find any direct-play casino stocks in my portfolio. Although MGM, I would concede, is best in breed. But one in particular to watch that I do own is Vici Properties, ticker symbol VICI, that actually spun out from Caesars after that bankruptcy Travis mentioned a little over a decade ago, specifically to get some of those real estate holdings off the balance sheet, and make it a less capital-intensive business. It owns Caesars Palace. It owns 17 other Caesars-operated properties. It owns a lot of MGM assets. It acquired the MGM counterpart, MGM Growth properties. It owns the Venetian. It owns the land under the Sphere. It owns the ground lease on that. Caesars still is the biggest tenant. It makes up 40% of MGM Vici's rent. This is a deal definitely to pay attention to. Fortunately, Vici structured its leases with change of control scenarios in mind, their master leases, so they will just transfer over to the new owner. Although Vici will have an opportunity to review the purchase, Fertitta should easily pass any qualifications test, if anything, this should be a net positive for Vici.

The tenant quality, and concentration with Caesars has been literally my biggest drawback of the stock. Fertitta's a much better capitalized, healthier tenant. Given Vici's concentration to those Caesars assets, it's exactly what you want to see, especially if Vegas continues to struggle a bit, which I, like Travis said, I think it's going to ebb and flow. But right now, Vegas tourism is down. There's no really denying that. When you have an industry that is cyclical like that, and a little bit unpredictable, tenant quality matters, and Fertitta is better tenant quality. One potential wildcard over time is that Fertitta has generally preferred to own its own real estate assets. The Golden Nugget casinos that it owns, it generally owns the buildings that those operate in. As those leases get closer to maturity over time, it'll be interesting to see how this plays out, but all in all, I think this is a net positive for the stock, and its risk level.

Jon Quast: I appreciate that you pointed it out because Vici is not one that I follow personally. But on the Hidden Gems team, we do a lot of AI scoring. We have some databases that our members have access to. Just looking, Vici is a Top 50 in the Hidden Gems database, and it's tied in the top 10 when it comes to its five-year financials. I'll have to be taking another look at that, especially with a potential catalyst from this Caesars deal. But we're out of time for today.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and is not approved by advertisers. Advertisements are sponsored content, and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks to our producer Dan Boyd and the rest of The Motley Fool team. For Matt Travis, and myself, thank you for listening, and we'll chat again soon.

Jon Quast has positions in Upstart. Matt Frankel, CFP has positions in Amazon, Rocket Companies, SoFi Technologies, Upstart, and Vici Properties and has the following options: long January 2027 $35 calls on Upstart and short January 2027 $50 calls on Upstart. Travis Hoium has positions in MGM Resorts International, Snowflake, SoFi Technologies, and Zillow Group. The Motley Fool has positions in and recommends Amazon, Home Depot, Rocket Companies, Snowflake, Trex, Upstart, and Zillow Group. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.