Shares of Snowflake (SNOW) dropped on Thursday morning after the company reported its second quarter results that topped estimates on the top and bottom lines and raised its full-year revenue guidance. Investors seem to be worried the company could be falling behind rivals when it comes to AI.

Jefferies Senior Analyst Brent Thill joins Catalysts to give insight into the company's recent performance as well as how it may fare moving forward.

Thill explains that this is a transition year for the company, with a new CEO and an expanded business model, so it may take some time for them to gain traction.

"But if you look at the future indications of health of the company are basically backlog signings. So the backlog was up high 40%. It accelerated. That's again, the future indication of health, so if the RPO numbers going higher, reported backlogs going higher, that means reported revenue should track that number over time. So I think going forward, this is a big transition year; '24 is, as we call it, a pit stop," says Thill.

Watch the video above to hear why Thill thinks the stock's valuation is its "biggest risk."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino