Warren Buffett sold 11 shares in Q2. Wall Street believes one of them will grow 45% over the next 12 months.

Warren Buffett never minded zig when others zag. After all, this is the man who is famous for saying, “Be fearful when others are greedy and be greedy when others fear.”

It should come as no surprise that Buffett is growing somewhat in 2024. The legendary investor and his team sold 11 stocks held by Berkshire Hathaway in the second trimester. However, analysts remain quite optimistic about a few of them. And Wall Street thinks one of them could rise by about 45% over the next 12 months.

All the stocks Buffett sold in Q2

Buffett’s big sell Apple in T2 it received the most attention. His nearly halving of Berkshire’s stake was particularly notable because Buffett has praised the company’s business and management for years.

Many investors also noted that Buffett continued to reduce Berkshire’s position in the Bank of America. Although the stock is still the conglomerate’s third-largest holding, Buffett doesn’t seem to be as enamored of the big bank as he once was.

Chevron is another major Berkshire holding that took a cut in Q2. Buffett sold 3.6 percent of the oil and gas giant, which remains the fifth largest position in Berkshire’s portfolio.

All other sales in Q2 were much smaller positions for Berkshire. These include double-digit percentage discounts in Capital One Financial, Flooring and decorand T-Mobile USA. Buffett sold smaller amounts of Liberty Media Class A, Liberty Media Class Cand Louisiana-Pacific.

Ultimately, Buffett (or his two investment managers, Todd Combs and Ted Weschler) decided to completely exit Berkshire positions in two stocks in Q2. Paramount Global and Snowflake (SNOW -0.79%) are no longer owned by Berkshire.

Wall Street’s favorite of the stocks Buffett sold

Of those 11 stocks, Wall Street is most bullish on one of the stocks Buffett and his team appeared to be least bullish on — Snowflake. The cloud software company’s 12-month average price reflects a 45% upside potential.

Financial Markets Infrastructure and Data Provider LSEG surveyed 44 analysts who cover Snowflake in September. Seven rated the stock a “strong buy.” 23 others rated Snowflake a “buy”. Twelve analysts recommended the stock a hold, while two rated it an “underperform”.

What does Wall Street love so much about Snowflake? His growth. The company’s revenue rose 29% year over year in Q2 to $868.8 million. Product revenue rose 30% to $829.3 million. No doubt analysts also like the 28% year-over-year customer growth with over $1 million in product revenue and the 127% net revenue retention rate.

Analysts like the strong growth outlook even more than previous growth. Snowflake impresses on this front as well. The total addressable market for the company’s software platform is expected to more than double from 2023 to 2028, reaching $342 billion.

Who’s Right About Snowflake — Buffett or Wall Street?

I understand Wall Street’s optimism about Snowflake’s business. The company is certainly in the right place at the right time with its Data Cloud product, which enables customers to consolidate data to more effectively harness the power of artificial intelligence (AI).

Snowflake’s most recent investor presentation included a slide that said, “There is no AI strategy without a data strategy.” This statement is true – and it sums up the great opportunity that lies ahead for the company.

Still, I also understand why Buffett exited Berkshire’s Snowflake stake. Berkshire invested in Snowflake’s 2020 IPO at $120 per share. The stock rose initially, but has fallen sharply this year. Berkshire took a profit by selling in Q2.

Snowflake is also an expensive stock — especially for Buffett. Shares of the cloud software company are trading at a forward earnings multiple of 135. Even with growth projections over the next five years factored in, the stock still looks expensive, with a price-to-earnings-growth (PEG) ratio of 1.96.

Wall Street may be right that Snowflake’s stock price will rise 45% over the next 12 months. However, I suspect that Buffett will not regret the decision to sell the stock when he did.