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The Zacks Consensus Estimate for earnings has remained steady at 26 cents per share over the past 30 days, indicating year-over-year growth of 44.4%. The consensus mark for revenues is pegged at $1.09 billion, indicating an increase of 24.9% from the year-ago quarter’s reported figure.
SNOW’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with the average earnings surprise being 34.72%.
Let’s see how things have shaped up for SNOW prior to this announcement:
Factors to Note for SNOW’s Q2
Snowflake’s fiscal second-quarter performance is expected to reflect an expanding clientele driven by strong AI capabilities and a rich partner base. Snowflake continues to benefit from strong adoption and increasing usage of its platform, as reflected in a net revenue retention rate of 124% at the end of the first quarter of fiscal 2026. The company reported 18.8% year-over-year growth in the number of customers, reaching 11,578 in the reported quarter.
At the end of the fiscal first quarter, SNOW had 606 customers with trailing 12-month product revenues greater than $1 million (up 27% year over year) and 754 Forbes Global 2000 customers (up 4% year over year). In the reported quarter, SNOW added 451 net new customers, representing a 19% increase year over year.
Expanding clientele is expected to have benefited top-line growth. For the second quarter of fiscal 2026, Snowflake expects product revenues between $1.03 billion and $1.04 billion. The projection range indicates year-over-year growth of 25%. The Zacks Consensus Estimate for second-quarter 2025 product revenues is pegged at $1.04 billion, indicating 25.5% growth from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for customers with trailing 12-month product revenues greater than $1 million is currently pegged at 634, suggesting 24.3% from the figure reported in the year-ago quarter. The consensus mark for total customers is pegged at 11,961, indicating 383 net new customers in the to-be-reported quarter.
However, higher expenses related to Snowflake Summit 2025 are expected to have hurt profitability in the to-be-reported quarter. Product gross margin contracted 100 basis points (bps) to 71% in the first quarter of fiscal 2026, and Snowflake expects second-quarter fiscal 2025 non-GAAP product gross margin of 75%, indicating a 100 bps decline sequentially. Snowflake expects non-GAAP operating margin to be 8%, suggesting a 100-bps sequential decline.
SNOW Shares Outperform Sector, Industry
Snowflake shares have appreciated 27.4% in the year-to-date period compared with the Zacks Computer & Technology sector’s return of 12.4% and the Zacks Internet Software industry’s 19.4% growth over the same time frame.
SNOW Stock’s Performance
Image Source: Zacks Investment Research
Snowflake stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
In terms of forward 12-month Price/Sales, SNOW is trading at 12.93X, higher than the industry’s 5.7X.
Valuation: SNOW is Trading at a Premium
Image Source: Zacks Investment Research
Snowflake Rides on Strong Portfolio
Snowflake is benefiting from portfolio strength. Products like Apache Iceberg and Hybrid tables, Polaris, Cortex Large Language Model (LLM) and ML functions are helping Snowflake win new clients. In April, Snowflake enhanced its AI Data Cloud by integrating core capabilities with Apache Iceberg tables. In May, SNOW announced the expansion of its AI Data Cloud with automotive-specific solutions, driving digital transformation and AI innovation across the automotive industry. At Summit 2025, SNOW introduced more than 100 new features, including Snowflake Copilot for conversational queries and native access to Meta’s Llama 4.
Snowflake’s AI capabilities have been noteworthy, with more than 5,200 accounts now using machine learning features weekly. The Cortex AI platform has evolved from experimental to production-ready infrastructure, featuring tools like Cortex AISQL that embed generative AI into SQL queries while delivering up to 60% cost savings.
SNOW’s AI-first approach is noteworthy, with 39% of customers maintaining data sharing relationships and listings growing 21% year over year to 3,098, in the first quarter of fiscal 2026. The planned acquisition of Crunchy Data will add enterprise-grade PostgreSQL capabilities to the platform, expanding Snowflake's addressable market into transactional workloads.
Rich Partner Base Expands SNOW’s Clientele
SNOW’s rich partner base, which includes major players like Microsoft (MSFT - Free Report) , Amazon (AMZN - Free Report) , NVIDIA (NVDA - Free Report) , ServiceNow, Fiserv, EY, LTMindtree, Next Pathway and S&P Global, is driving prospects.
The Microsoft alliance integrates OpenAI models into Cortex AI through Azure, extending features into Microsoft 365 and Teams. The NVIDIA partnership combines Cortex AI with NVIDIA AI Enterprise, enabling customers to scale advanced AI applications. Amazon remains a critical pillar, with Snowflake supporting more than 6,000 joint customers across industries through Amazon Web Services.
Stiff Competition is a Headwind for SNOW
Snowflake is facing stiff competition from the likes of Amazon Web Services, Azure, and Google Cloud. SNOW faces stiff competition from the likes of Amazon Redshift, Google BigQuery and Microsoft Azure Synapse, which is expected to keep revenue growth under pressure. First-quarter fiscal 2026 revenue grew 26% year over year, slower than 27% growth in fourth-quarter fiscal 2025 and 28% in third-quarter fiscal 2025. Second-quarter fiscal 2026 revenues are now expected to grow 25%.
Elevated infrastructure spending, particularly on GPUs to support AI-driven initiatives, is adding to cost pressures.
Conclusion
Snowflake’s long-term prospects ride on an innovative portfolio and rich partner base. However, stiff competition and stretched valuation make the stock risky right now.
Image: Bigstock
Buy, Sell or Hold Snowflake Stock? Key Tips Ahead of Q2 Earnings
Key Takeaways
Snowflake (SNOW - Free Report) is set to release second-quarter fiscal 2026 results on Aug. 27.
The Zacks Consensus Estimate for earnings has remained steady at 26 cents per share over the past 30 days, indicating year-over-year growth of 44.4%. The consensus mark for revenues is pegged at $1.09 billion, indicating an increase of 24.9% from the year-ago quarter’s reported figure.
SNOW’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with the average earnings surprise being 34.72%.
Snowflake Inc. Price and EPS Surprise
Snowflake Inc. price-eps-surprise | Snowflake Inc. Quote
Let’s see how things have shaped up for SNOW prior to this announcement:
Factors to Note for SNOW’s Q2
Snowflake’s fiscal second-quarter performance is expected to reflect an expanding clientele driven by strong AI capabilities and a rich partner base. Snowflake continues to benefit from strong adoption and increasing usage of its platform, as reflected in a net revenue retention rate of 124% at the end of the first quarter of fiscal 2026. The company reported 18.8% year-over-year growth in the number of customers, reaching 11,578 in the reported quarter.
At the end of the fiscal first quarter, SNOW had 606 customers with trailing 12-month product revenues greater than $1 million (up 27% year over year) and 754 Forbes Global 2000 customers (up 4% year over year). In the reported quarter, SNOW added 451 net new customers, representing a 19% increase year over year.
Expanding clientele is expected to have benefited top-line growth. For the second quarter of fiscal 2026, Snowflake expects product revenues between $1.03 billion and $1.04 billion. The projection range indicates year-over-year growth of 25%. The Zacks Consensus Estimate for second-quarter 2025 product revenues is pegged at $1.04 billion, indicating 25.5% growth from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for customers with trailing 12-month product revenues greater than $1 million is currently pegged at 634, suggesting 24.3% from the figure reported in the year-ago quarter. The consensus mark for total customers is pegged at 11,961, indicating 383 net new customers in the to-be-reported quarter.
However, higher expenses related to Snowflake Summit 2025 are expected to have hurt profitability in the to-be-reported quarter. Product gross margin contracted 100 basis points (bps) to 71% in the first quarter of fiscal 2026, and Snowflake expects second-quarter fiscal 2025 non-GAAP product gross margin of 75%, indicating a 100 bps decline sequentially. Snowflake expects non-GAAP operating margin to be 8%, suggesting a 100-bps sequential decline.
SNOW Shares Outperform Sector, Industry
Snowflake shares have appreciated 27.4% in the year-to-date period compared with the Zacks Computer & Technology sector’s return of 12.4% and the Zacks Internet Software industry’s 19.4% growth over the same time frame.
SNOW Stock’s Performance
Image Source: Zacks Investment Research
Snowflake stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
In terms of forward 12-month Price/Sales, SNOW is trading at 12.93X, higher than the industry’s 5.7X.
Valuation: SNOW is Trading at a Premium
Image Source: Zacks Investment Research
Snowflake Rides on Strong Portfolio
Snowflake is benefiting from portfolio strength. Products like Apache Iceberg and Hybrid tables, Polaris, Cortex Large Language Model (LLM) and ML functions are helping Snowflake win new clients. In April, Snowflake enhanced its AI Data Cloud by integrating core capabilities with Apache Iceberg tables. In May, SNOW announced the expansion of its AI Data Cloud with automotive-specific solutions, driving digital transformation and AI innovation across the automotive industry. At Summit 2025, SNOW introduced more than 100 new features, including Snowflake Copilot for conversational queries and native access to Meta’s Llama 4.
Snowflake’s AI capabilities have been noteworthy, with more than 5,200 accounts now using machine learning features weekly. The Cortex AI platform has evolved from experimental to production-ready infrastructure, featuring tools like Cortex AISQL that embed generative AI into SQL queries while delivering up to 60% cost savings.
SNOW’s AI-first approach is noteworthy, with 39% of customers maintaining data sharing relationships and listings growing 21% year over year to 3,098, in the first quarter of fiscal 2026. The planned acquisition of Crunchy Data will add enterprise-grade PostgreSQL capabilities to the platform, expanding Snowflake's addressable market into transactional workloads.
Rich Partner Base Expands SNOW’s Clientele
SNOW’s rich partner base, which includes major players like Microsoft (MSFT - Free Report) , Amazon (AMZN - Free Report) , NVIDIA (NVDA - Free Report) , ServiceNow, Fiserv, EY, LTMindtree, Next Pathway and S&P Global, is driving prospects.
The Microsoft alliance integrates OpenAI models into Cortex AI through Azure, extending features into Microsoft 365 and Teams. The NVIDIA partnership combines Cortex AI with NVIDIA AI Enterprise, enabling customers to scale advanced AI applications. Amazon remains a critical pillar, with Snowflake supporting more than 6,000 joint customers across industries through Amazon Web Services.
Stiff Competition is a Headwind for SNOW
Snowflake is facing stiff competition from the likes of Amazon Web Services, Azure, and Google Cloud. SNOW faces stiff competition from the likes of Amazon Redshift, Google BigQuery and Microsoft Azure Synapse, which is expected to keep revenue growth under pressure. First-quarter fiscal 2026 revenue grew 26% year over year, slower than 27% growth in fourth-quarter fiscal 2025 and 28% in third-quarter fiscal 2025. Second-quarter fiscal 2026 revenues are now expected to grow 25%.
Elevated infrastructure spending, particularly on GPUs to support AI-driven initiatives, is adding to cost pressures.
Conclusion
Snowflake’s long-term prospects ride on an innovative portfolio and rich partner base. However, stiff competition and stretched valuation make the stock risky right now.
Snowflake currently carries a Zacks Rank #3 (Hold), which implies that investors should wait for a favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.