🧠 Will AI Reignite SaaS Growth?

View Online | Sign Up | Advertise

Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better.

Today’s Issue Read Time: <3 minutes

  • Lesson: AI and SaaS applications
  • Timeless Content: Understanding valuation multiples
  • Thread: The Sam Walton story
  • Resource: ETF finder
  • And more!

Dream of traveling the world, for FREE?

As an avid traveler, I believe in maximizing my credit card rewards to turn them into free flights and hotel stays. That’s why I use Kudos, a free browser extension that helps you pick the best card to use when shopping online, ensuring you always earn the highest rewards, points, or cash back on everyday purchases.

With Kudos, you can even discover new credit cards with the best sign up bonuses available through their partnership with The Points Guy. Kudos is like Apple Pay, Honey, and Nerdwallet, all-in-one.

The best part? Kudos is completely FREE. No hidden fees, just more cash back into your own pocket. It’s no wonder it’s trusted by 200,000+ members earning over $150 million in rewards.

Just for my readers: Sign up for Kudos with code “BRIAN” and get $20 back after your first eligible purchase!


On November 30, 2022, a seismic shift rippled through the tech industry. ChatGPT was introduced to the world. In the 18 months since, artificial intelligence (AI) has drastically improved and changed the way some industries operate.

For investors, the opportunity has come in waves.

Wave 1: Semiconductors — NVIDIA shares are up over 450% since ChatGPT’s release. The biggest reason: everyone is gobbling up NVIDIA’s chips for data centers. Notice that revenue growth accelerated immediately after ChatGPT’s release.

Wave 2: Hyperscalers — Amazon shares are up a more modest 90% since ChatGPT’s release. The company was a major purchaser of those NVIDIA chips for its Amazon Web Services (AWS) offerings. Notice that it took about a year for that AI-induced bump to surface for Amazon. This makes sense: it takes time for the chips to be installed in AWS data centers.

Wave 3: Software-as-a-Service (SaaS) Applications — Snowflake shares are only up 15% since ChatGPT’s release. In theory, the company’s usage-based data-crunching tools should be major beneficiaries of AI. But as you can see, revenue growth has not re-accelerated.

Does that mean Snowflake won’t benefit from AI?

Not necessarily.

It takes months for those NVIDIA chips to make it to Amazon. And then it takes months for Amazon’s customers to start ramping up AI-usage. Only then would a benefit show up for Snowflake.

That’s why the next year will be incredibly important for stocks like Snowflake (as well as similar companies like MongoDB, Datadog, and Cloudflare). The top priority for long-term investors should be revenue growth re-acceleration. That’s what we’ll be watching closely in the year ahead.

Of course, a single quarter doesn’t make or break a company, but this is decidedly an important threshold for investors in such companies.

Wishing you investing success,

– Brian Feroldi, Brian Stoffel, & Brian Withers

P.S. Both Snowflake and NVIDIA will come out with earnings later today. Check out our YouTube channel for real-time updates on the results.

One Simple Graphic:

One Piece of Timeless Content:

The P/E is one of the most popular ways to judge a stock’s valuation, but this metric has numerous limitations. Morgan Stanley’s Michael Mauboussin explores the P/E and EV/EBITDA ratios to explain the benefits and limitations of these popular valuation metrics.

One Thread:

One Resource:

Interested in investing in a sector or industry you aren’t familiar with? One of the best ways to do that is through an ETF. But how do you find the ETFs that cover your interests? This tool allows you to input a stock, and it will return any ETFs in which it resides.

One Quote:

👋 What did you think of today’s newsletter?

🧠🧠🧠🧠🧠 It was awesome!

🧠🧠🧠 It was OK

🧠 Do better

More From Us:

📗 If you’ve read Brian Feroldi’s book, he’d love a review.

👨‍🎓 Interested in learning to read financial statements like Warren Buffett? Check out our self-paced course, The Buffett Method.

🎬 Want a review of popular company earnings? Check out our YouTube channel! The Sea Limited earnings analysis video is now available!