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Snowflake Rallies Post Q1 Earnings: Buy, Sell or Hold the Stock?
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Snowflake (SNOW - Free Report) shares have gained 11.7% since the company reported its first-quarter fiscal 2026 results on May 21. The upside was driven by strong adoption and increasing usage of its platform, as reflected by a net revenue retention rate of 124% as of April 30, 2025. The number of customers that contributed more than $1 million in the trailing 12-month product revenue increased from 485 as of April 30, 2024, to 606 as of April 30, 2025.
The company’s shares have soared 29.5% in the year-to-date period, outperforming the Zacks Computer and Technology sector’s decrease of 3.8% and the Zacks Internet Software industry’s increase of 4.3%. The outperformance in SNOW stock is driven by its strong portfolio and an expanding partner base. SNOW had 11,578 customers, increasing from 9,741 customers as of April 30, 2024. In the first quarter of fiscal 2026, SNOW also added 451 net new customers, representing a 19% increase year over year.
YTD Performance
Image Source: Zacks Investment Research
However, Snowflake shares are currently overvalued, as suggested by its Value Score of F.
The SNOW stock is trading at a premium with a forward 12-month Price/Sales of 13.9X compared with the Internet Software industry’s 5.33X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
At such a high valuation, the question that arises is whether the SNOW stock is still a worthy investment. Let us dig deep to find out.
SNOW’s Expanding AI Partnerships Drive Growth
SNOW’s strong partner base, which includes major players like Microsoft (MSFT - Free Report) , Amazon, NVIDIA (NVDA - Free Report) , Meta Platform (META - Free Report) , ServiceNow, Fiserv, EY, LTMindtree, Next Pathway and S&P Global, has been a major growth driver of its success.
In February 2025, SNOW announced an expanded partnership with Microsoft to integrate OpenAI’s models into Snowflake Cortex AI through Azure OpenAI Service, empowering enterprises to build AI-powered apps. This collaboration also brings Snowflake Cortex Agents to Microsoft 365 Copilot and Microsoft Teams, enhancing productivity with AI-driven insights.
Snowflake strengthened its AI leadership by integrating Meta Platform’s Llama 4 model into its Cortex platform, ensuring day-one availability for customers. This partnership with Meta Platform allows Snowflake to offer advanced AI capabilities, enhancing enterprise AI strategies worldwide.
Snowflake’s partnership with NVIDIA enables businesses to build customized AI data applications using Snowflake Cortex AI and NVIDIA AI Enterprise software, driving enhanced AI performance and integration.
SNOW Benefits From Expanding Portfolio
Snowflake’s expanding portfolio has been noteworthy. Products like Apache Iceberg and Hybrid tables, Polaris, Cortex Large Language Model and ML functions are helping Snowflake win new clients.
Building on this momentum, in April 2025, Snowflake enhanced its AI Data Cloud by integrating core capabilities with Apache Iceberg tables. This enabled seamless open lakehouse strategies, improved query performance, comprehensive security, and data sharing while advancing open-source contributions.
Further strengthening its offerings in May 2025, SNOW announced the expansion of its AI Data Cloud with automotive-specific solutions, driving digital transformation and AI innovation across the automotive industry.
Snowflake’s investments in artificial intelligence and machine learning, including the introduction of Cortex AI and its integration with models from OpenAI and Anthropic, drove customer engagement. More than 5,200 customers are using Snowflake’s AI and ML technology weekly.
SNOW Offers Positive Guidance for Q2 and FY26
For the second quarter of fiscal 2026, Snowflake expects product revenues in the range of $1.03-$1.04 billion. The projection range indicates year-over-year growth of 25%.
For fiscal 2026, Snowflake expects product revenues to increase 25% from fiscal 2025 to $4.32 billion.
The Zacks Consensus Estimate for second-quarter fiscal 2026 revenues is currently pegged at $1.08 billion, indicating 24.60% year-over-year growth. The consensus mark for earnings is currently pegged at 25 cents per share, which has decreased by a penny over the past 30 days. This suggests an increase of 38.89% year over year.
The Zacks Consensus Estimate for SNOW’s fiscal 2026 revenues is pegged at $4.50 billion, indicating year-over-year growth of 24.06%. The consensus mark for earnings is pegged at $1.14 per share, which has decreased by a penny over the past 30 days. This suggests an increase of 37.35% on a year-over-year basis.
Snowflake benefits from a rich partner base, expanding clientele and an innovative portfolio, but is weighed down by intense competition from major cloud providers like AWS, Azure, and Google Cloud, which has posed challenges.
Additionally, Snowflake’s expenses are rising, impacting its profitability and potentially its stock performance.
SNOW has also been facing tough competition from rivals like Databricks, coupled with rising GPU-related costs, as the company is aggressively investing in AI initiatives. Stretched valuation also remains a concern.
Image: Shutterstock
Snowflake Rallies Post Q1 Earnings: Buy, Sell or Hold the Stock?
Snowflake (SNOW - Free Report) shares have gained 11.7% since the company reported its first-quarter fiscal 2026 results on May 21. The upside was driven by strong adoption and increasing usage of its platform, as reflected by a net revenue retention rate of 124% as of April 30, 2025. The number of customers that contributed more than $1 million in the trailing 12-month product revenue increased from 485 as of April 30, 2024, to 606 as of April 30, 2025.
The company’s shares have soared 29.5% in the year-to-date period, outperforming the Zacks Computer and Technology sector’s decrease of 3.8% and the Zacks Internet Software industry’s increase of 4.3%. The outperformance in SNOW stock is driven by its strong portfolio and an expanding partner base. SNOW had 11,578 customers, increasing from 9,741 customers as of April 30, 2024. In the first quarter of fiscal 2026, SNOW also added 451 net new customers, representing a 19% increase year over year.
YTD Performance
Image Source: Zacks Investment Research
However, Snowflake shares are currently overvalued, as suggested by its Value Score of F.
The SNOW stock is trading at a premium with a forward 12-month Price/Sales of 13.9X compared with the Internet Software industry’s 5.33X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
At such a high valuation, the question that arises is whether the SNOW stock is still a worthy investment. Let us dig deep to find out.
SNOW’s Expanding AI Partnerships Drive Growth
SNOW’s strong partner base, which includes major players like Microsoft (MSFT - Free Report) , Amazon, NVIDIA (NVDA - Free Report) , Meta Platform (META - Free Report) , ServiceNow, Fiserv, EY, LTMindtree, Next Pathway and S&P Global, has been a major growth driver of its success.
In February 2025, SNOW announced an expanded partnership with Microsoft to integrate OpenAI’s models into Snowflake Cortex AI through Azure OpenAI Service, empowering enterprises to build AI-powered apps. This collaboration also brings Snowflake Cortex Agents to Microsoft 365 Copilot and Microsoft Teams, enhancing productivity with AI-driven insights.
Snowflake strengthened its AI leadership by integrating Meta Platform’s Llama 4 model into its Cortex platform, ensuring day-one availability for customers. This partnership with Meta Platform allows Snowflake to offer advanced AI capabilities, enhancing enterprise AI strategies worldwide.
Snowflake’s partnership with NVIDIA enables businesses to build customized AI data applications using Snowflake Cortex AI and NVIDIA AI Enterprise software, driving enhanced AI performance and integration.
SNOW Benefits From Expanding Portfolio
Snowflake’s expanding portfolio has been noteworthy. Products like Apache Iceberg and Hybrid tables, Polaris, Cortex Large Language Model and ML functions are helping Snowflake win new clients.
Building on this momentum, in April 2025, Snowflake enhanced its AI Data Cloud by integrating core capabilities with Apache Iceberg tables. This enabled seamless open lakehouse strategies, improved query performance, comprehensive security, and data sharing while advancing open-source contributions.
Further strengthening its offerings in May 2025, SNOW announced the expansion of its AI Data Cloud with automotive-specific solutions, driving digital transformation and AI innovation across the automotive industry.
Snowflake’s investments in artificial intelligence and machine learning, including the introduction of Cortex AI and its integration with models from OpenAI and Anthropic, drove customer engagement. More than 5,200 customers are using Snowflake’s AI and ML technology weekly.
SNOW Offers Positive Guidance for Q2 and FY26
For the second quarter of fiscal 2026, Snowflake expects product revenues in the range of $1.03-$1.04 billion. The projection range indicates year-over-year growth of 25%.
For fiscal 2026, Snowflake expects product revenues to increase 25% from fiscal 2025 to $4.32 billion.
The Zacks Consensus Estimate for second-quarter fiscal 2026 revenues is currently pegged at $1.08 billion, indicating 24.60% year-over-year growth. The consensus mark for earnings is currently pegged at 25 cents per share, which has decreased by a penny over the past 30 days. This suggests an increase of 38.89% year over year.
The Zacks Consensus Estimate for SNOW’s fiscal 2026 revenues is pegged at $4.50 billion, indicating year-over-year growth of 24.06%. The consensus mark for earnings is pegged at $1.14 per share, which has decreased by a penny over the past 30 days. This suggests an increase of 37.35% on a year-over-year basis.
Snowflake Inc. Price and Consensus
Snowflake Inc. price-consensus-chart | Snowflake Inc. Quote
What Should Investors Do With SNOW Stock?
Snowflake benefits from a rich partner base, expanding clientele and an innovative portfolio, but is weighed down by intense competition from major cloud providers like AWS, Azure, and Google Cloud, which has posed challenges.
Additionally, Snowflake’s expenses are rising, impacting its profitability and potentially its stock performance.
SNOW has also been facing tough competition from rivals like Databricks, coupled with rising GPU-related costs, as the company is aggressively investing in AI initiatives. Stretched valuation also remains a concern.
SNOW currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.