Flybridge AI Index: November 2024 Update

Summary:

• In November, the Flybridge AI Index returned 14%. For the prior 12 months, the Index has returned 39% to its current level of 143% since January of 2023.
• Out of the 32 active companies in the Index, 24 rose in October, while 8 declined.
• Significant gainers include Palantir (+60%), and Snowflake (+51%). Significant decliners include Arm (-5%), and TSMC (-4%).
• The median NTM revenue multiple was 9.2x, with a median quarterly YoY revenue growth rate of 13%.
• The remaining companies in the Index reported positive Q3–24 earnings, leading to the Index’s largest monthly increase since its inception.

AI Index record breaking month!

The index recorded its highest monthly increase since inception. Growth was largely driven by Palantir and Snowflake. This is remarkable given their combined annual revenue exceeds $6 billion.

Palantir reported $725M in revenue (+30% YoY), exceeding analyst expectations of $703M by 3%. Its transition from consulting to scalable software solutions is an inspiring model for AI startups looking to disrupt service-heavy industries. During their earnings call, the company shared how their AI platform reduced an insurance company’s underwriting response time from over two weeks to just three hours using 78 AI agents — an impressive improvement. Palantir’s success story offers valuable lessons for founders aiming to build service-as-software solutions. According to the founding team, two key pillars were deeply engaging with customers to understand workflows and iterating their platform to transform bespoke services into scalable, reusable solutions. They also emphasized leveraging business ontology to map workflows, data, and operations, guiding R&D to enable automation, better integration, and scalability.

Snowflake surpassed expectations, reporting $942M (+28% YoY) compared to the $894M forecast, a 5% beat. Notably, it showed ARR growth, adding $284M this quarter after challenges in earlier periods. With data central to generative AI, Snowflake should be well positioned to seize the opportunity. However, its key competitor, Databricks, which specializes in unstructured data and focused on AI earlier, is gaining ground quickly. Databricks is projected to hit $2.6B in revenue this year (compared to Snowflake’s $3.5B) and is expected to grow over 40% annually — nearly double Snowflake’s growth estimates. If this trend holds, Databricks could match Snowflake’s revenue by 2026, according to The Information. While I’m optimistic about Snowflake’s future, Databricks seems better positioned to become the dominant player in the data space.

Last month, we highlighted how generative AI is beginning to deliver tangible value. Yamini Rangan, CEO of HubSpot, captured this sentiment well in their latest earnings call.

“if last year, AI was a buzzword and there was a level of hesitancy on how AI needs to get adopted. This year, our customers tell us that AI is real. There’s real value. There’s real use cases, there’s real growth opportunities”

AI Insights and News:

Tech Companies Q3 2024 Earnings Highlights:

NVIDIA reported their Q3–24 earnings. Some interesting insights from the month included

• Data Center revenue reached $31 billion, up 112% year-over-year, fueled by exceptional demand for AI-driven solutions
• Anticipate significant growth in AI inference, driven by adoption of Agentic AI, AI-native startups, and multimodal applications

Palantir reported their Q3–24 earnings. Some interesting insights from the month included

• Revenue grew 30% YoY, largely attributed to the ongoing “AI revolution”
• They shared customer success stories demonstrating their AI platform’s impact, such as reducing underwriting response times for a global insurance company from over two weeks to just three hours with 78 AI agents and increasing on-time delivery rates for a manufacturing client from 40% to 90%
• Palantir highlighted that AI’s edge lies in its applications and workflows, not just the models, to maintain long-term competitiveness

Snowflake reported their Q3–24 earnings. Some interesting insights include

• AI-related features have been deployed in over 1,000 use cases across Snowflake customers, with 3,200 accounts actively using AI and ML capabilities

Hubspot reported their Q3–24 earnings. Some interesting insights from the month included

• The Content Hub, driven by AI innovation, showed rapid growth with a 50% attach rate to Marketing Hub
• They shared success stories from customers, including the Franchise Brokers Association, which boosted content production by 250% and improved organic lead generation by 216% using tools like their blog writer and content remix. Kaplan Early Learning Company enabled 25%-30% of customers to self-serve with their customer agent, cutting ticket response times by 30%. Morehouse College saw a 30% increase in page views and 27% more time spent on their site by using the content agent to create blogs with best practices
• HubSpot launched Breeze Intelligence, which enhances customer and company data with over 200 million data points, enabling improved segmentation, lead scoring, and personalization
• AI awareness within the customer base increased by 13% quarter-over-quarter, with two-thirds of enterprise customers and half of Pro customers engaging with AI features.

ARM reported their Q3–24 earnings. Some interesting insights include

• AI-driven demand is a significant growth driver for Arm, with record royalty revenue of $514 million (up 23% YoY).
• Collaborated with Meta to optimize Llama 3.2 for on-device processing using Arm libraries

Palo Alto reported their Q3–24 earnings. Some interesting insights include

• Cortex, the company’s AI-enhanced platform for security operations, crossed the $1 billion ARR milestone
• The company introduced Cortex XSIAM, a platform leveraging AI for autonomous SOC capabilities. XSIAM now has over 150 customers, including 40 with more than $1 million in ARR

Qualcomm reported their Q3–24 earnings. Some interesting insights include

• Qualcomm sees AI as driving a new cycle of semiconductor innovation and expects its edge AI capabilities to capitalize on this trend
• Partnered with Meta to support Llama 3.2, including their multimodal 11 billion, 3 billion, and 1 billion parameter models on Snapdragon-powered devices

SuperMicro reported their Q3–24 earnings. Some interesting insights from the month included

• AI contributed over 70% of revenue across enterprise and cloud service provider markets during the quarter
• The company projects that 15% to 30% of new data centers will adopt liquid cooling solutions, supported by AI infrastructure demand, within the next 12 months.

Astera reported their Q3–24 earnings. Some interesting insights from the month included

• Scorpio Astera Smart Fabric switches, optimized for AI workloads, are projected to generate over 10% of revenue by 2025 and double their total addressable market over time

We thank Aiera, an AI-powered equity research platform, for accelerating our data and insight extraction process.

Note: These insights are focused on AI developments and priorities as discussed in management publications, earnings calls, and other company announcements.

Additions/Deletions:

No new additions were made to the AI Index in October.

The information in the Index is for informational purposes only. Flybridge is not offering investment advisory services, nor is it offering to sell securities.