The S&P 500 increased 24% last year, and it has already advanced another 4% this year. Given all that growth, some stocks are likely trading at expensive valuations. But not all stocks. For instance, Wall Street analysts at Morgan Stanley and Jefferies Financial Group see sizeable buying opportunities in Snowflake (SNOW 0.32%) and Sea Limited (SE -0.74%).

Keith Weiss at Morgan Stanley has a bull-case price target of $380 per share on Snowflake, implying a 78% upside from its current price. And Thomas Chong at Jefferies has a price target of $80 per share on Sea Limited, implying 90% upside from its current price.

Investors should never rely too heavily on short-term forecasts, especially when those forecasts are coming from individual analysts. But Snowflake and Sea Limited warrant consideration. Let's take a closer look at these two growth stocks.

1. Snowflake

Snowflake impressed Wall Street with its third-quarter report, beating expectations on the top and bottom lines. Customers increased 24% year over year to 8,907, and the average customer spent 35% more. Revenue rose 32% year over year to $734 million, and non-GAAP net income more than doubled to reach $90 million. The company is well-positioned to maintain that momentum as businesses prioritize IT spending on analytics and artificial intelligence (AI).

Snowflake helps businesses turn big data into smart decisions. Its platform supports multiple workloads, including data ingestion, transformation, storage, and analytics, making it a more efficient option for companies that currently rely on multiple-point solutions. Snowflake is also cloud-neutral, meaning its platform runs across all three major public clouds. That gives the company an edge over Amazon and Microsoft.

The Snowflake Marketplace also supports data sharing, creating a network effect that makes the Snowflake cloud increasingly attractive as more customers upload data. That could be a substantial tailwind as businesses invest in AI, simply because data is a limiting factor in the training of machine learning models. Indeed, CEO Frank Slootman says, "Data sharing makes Snowflake uniquely positioned to enable AI workloads."

The company is leaning into AI with its product roadmap. Snowflake recently launched its Native App Framework, which lets businesses build applications on its infrastructure. That framework is the foundation of Cortex, a new cloud service that lets businesses build AI applications using large language models pre-trained for specific use cases like text summarization, translation, and forecasting. Cortex also includes readymade tools like Document AI for data extraction.

Wall Street expects Snowflake to grow sales at 32% annually over the next five years. That consensus estimate makes the current valuation of 26.5 times sales seem somewhat tolerable. But from that pricey multiple, the probability of a 78% return in the next 12 months is virtually nonexistent. Investors with a five-year time horizon can buy a very small position in Snowflake stock today, but waiting for a cheaper entry point may be the more prudent decision.

2. Sea Limited

Southeast Asian company Sea Limited reported disappointing financial results in the third quarter. Revenue increased 5% year over year to $3.3 billion on strong momentum in e-commerce and financial services, offset by a sharp decline in digital entertainment revenue. Sea also reported a GAAP loss of $144 million. That's an improvement from its loss of $569 million last year, but disappointing nonetheless because the company was profitable in the first and second quarters.

Sea Limited is particularly well-positioned to grow its e-commerce business, Shopee. Online sales represent just 8% of total retail sales in Southeast Asia, much less than 22% in nearby China, according to Morningstar. Shopee is the most visited online marketplace across Southeast Asia, and it was the third-most downloaded marketplace app in the world last year, behind Temu and Amazon.

That scale creates a network effect that brings more merchants and consumers to the Shopee ecosystem. Sea accelerates that flywheel with adjacent merchant solutions for advertising and logistics. It also provides payment processing, financing, and banking services through its fintech subsidiary, SeaMoney. Financial services revenue increased 36% year over year in the third quarter.

Sea has less compelling growth prospects in its digital entertainment business. Its Garena subsidiary develops PC and mobile games, and its most prolific title, Free Fire, was the most downloaded mobile game worldwide in the third quarter. But paying users have plummeted nearly 60% since peaking in 2021, underscoring monetization challenges. Without another hit title, Garena has much less upside than Shopee or SeaMoney.

On that note, e-commerce sales in Southeast Asia are expected to increase by 16% annually through 2030. Meanwhile, digital payments volume and lending volume are projected to grow at 12% annually and 26% annually, respectively. That gives Sea a good shot at annual sales growth in the mid-teens for the foreseeable future, which makes its current valuation of 1.9 times sales look cheap.

To be clear, the digital entertainment business is an unknown that could drag on growth, and there's no guarantee shareholders will see a 90% return in the next year. Investors comfortable with that information can consider buying a small position today.