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Snowflake Plunges 35% Year to Date: Buy, Sell or Hold the Stock?
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Key Takeaways
Snowflake shares fell sharply YTD, pressured by margin headwinds, AI costs and rising competition.
SNOW sees strong demand with 125% net revenue retention and growth in high-spending customers.
AI products like Snowflake Intelligence and Cortex Code drive adoption and expand platform capabilities.
Snowflake (SNOW - Free Report) shares have lost 35.4% in the year-to-date period, underperforming the Zacks Computer and Technology sector’s increase of 10.6% and the Zacks Internet Software industry’s decrease of 12.1%.
SNOW shares have declined as the company’s free cash flow margin faced a 150-basis-point headwind in the fourth quarter of fiscal 2026 due to the Observe acquisition. Stiff competition also remains a concern. Snowflake’s margins are impacted by the lower margin profile of new AI products and potential infrastructure costs associated with supporting AI-driven initiatives.
SNOW Stock Performance
Image Source: Zacks Investment Research
However, SNOW is benefiting from strong adoption and increasing usage of its platform, as reflected by the net revenue retention rate of 125% in the fourth quarter of fiscal 2026.
In the fourth quarter of fiscal 2026, Snowflake added 740 net new customers, up 40% year over year. The company now has 733 customers spending more than $1 million annually, up 27% year over year, and 56 customers spending more than $10 million annually, up 56% year over year.
SNOW Benefits From Expanding Portfolio
SNOW’s expanding portfolio has been noteworthy. In 2026, Snowflake launched more than 430 product capabilities, including Snowflake Intelligence, Cortex Code, Snowflake OpenFlow and Snowflake Postgres. These innovations enhanced the platform’s usability and scalability.
The company’s AI-driven products, particularly Snowflake Intelligence and Cortex Code, have been a major growth driver. In 2026, Snowflake Intelligence, which provides enterprise-grade agent capabilities, has been adopted by more than 2,500 accounts within just three months of its launch, nearly doubling quarter over quarter. Cortex Code, a transformational coding agent, has been embraced by more than 4,400 customers, enabling faster development and deployment of AI-powered applications.
Further expanding its portfolio, in April 2026, Snowflake announced major updates to Snowflake Intelligence and Cortex Code, advancing its vision of becoming the control plane for the agentic enterprise. These enhancements enable businesses to connect data, tools, and AI systems seamlessly, allowing intelligent agents to automate workflows and deliver deeper, context-driven insights. The updates also expand AI-powered development capabilities, helping organizations build, manage and scale enterprise AI directly within their existing ecosystems.
SNOW Offers Positive Guidance
Snowflake’s rich partner base and an innovative portfolio are expected to drive the company’s top-line growth.
For the first quarter of fiscal 2027, Snowflake expects product revenues in the range of $1.262-$1.267 billion. The projection range indicates year-over-year growth of 27%. The operating margin is expected to be 9% for the fiscal first quarter. The Zacks Consensus Estimate for the fiscal first-quarter revenues is currently pegged at $1.32 billion, indicating 26.85% year-over-year growth.
The consensus mark for earnings is currently pegged at 32 cents per share, which has been unchanged over the past 30 days. This suggests an increase of 33.33% year over year.
Despite Snowflake’s expanding portfolio and partner base, the company is facing stiff competition from the likes of major players like Oracle (ORCL - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) , which are also expanding their footprint in the AI space.
Oracle’s expanding portfolio has been noteworthy. In April 2026, Oracle expanded AI capabilities in Oracle AI Database@Google Cloud, introducing Gemini-powered agents for natural language data access, enhancing enterprise insights, productivity and multicloud data innovation.
Amazon's AI initiatives gained significant momentum during the first quarter of 2026. Amazon's cloud computing platform, Amazon Web Services' chips business, including Graviton, Trainium, and Nitro, exceeded a $20 billion annual revenue run rate and is growing triple-digit percentages year over year.
Alphabet has been growing rapidly in the booming cloud-computing market. In the first quarter of 2026, Alphabet's cloud revenues surged 63% year over year to roughly $20 billion. This acceleration is largely fueled by enterprise adoption of generative AI offerings such as Gemini, with revenue from AI-based cloud products growing nearly 800% year over year.
SNOW Trading at a Premium
Snowflake shares are currently overvalued, as suggested by its Value Score of F.
SNOW stock is trading at a premium with a forward 12-month Price/Sales of 7.83X compared with the Internet Software industry’s 3.8X.
SNOW Valuation
Image Source: Zacks Investment Research
What Should Investors Do With SNOW Stock?
Despite SNOW’s robust portfolio, challenging macroeconomic uncertainties, rising AI costs and stiff competition from hyperscale cloud providers remain headwinds. Stretched valuation remains a concern.
View the Zacks #1 Rank List
Image: Shutterstock
Snowflake Plunges 35% Year to Date: Buy, Sell or Hold the Stock?
Key Takeaways
Snowflake (SNOW - Free Report) shares have lost 35.4% in the year-to-date period, underperforming the Zacks Computer and Technology sector’s increase of 10.6% and the Zacks Internet Software industry’s decrease of 12.1%.
SNOW shares have declined as the company’s free cash flow margin faced a 150-basis-point headwind in the fourth quarter of fiscal 2026 due to the Observe acquisition. Stiff competition also remains a concern. Snowflake’s margins are impacted by the lower margin profile of new AI products and potential infrastructure costs associated with supporting AI-driven initiatives.
SNOW Stock Performance
Image Source: Zacks Investment Research
However, SNOW is benefiting from strong adoption and increasing usage of its platform, as reflected by the net revenue retention rate of 125% in the fourth quarter of fiscal 2026.
In the fourth quarter of fiscal 2026, Snowflake added 740 net new customers, up 40% year over year. The company now has 733 customers spending more than $1 million annually, up 27% year over year, and 56 customers spending more than $10 million annually, up 56% year over year.
SNOW Benefits From Expanding Portfolio
SNOW’s expanding portfolio has been noteworthy. In 2026, Snowflake launched more than 430 product capabilities, including Snowflake Intelligence, Cortex Code, Snowflake OpenFlow and Snowflake Postgres. These innovations enhanced the platform’s usability and scalability.
The company’s AI-driven products, particularly Snowflake Intelligence and Cortex Code, have been a major growth driver. In 2026, Snowflake Intelligence, which provides enterprise-grade agent capabilities, has been adopted by more than 2,500 accounts within just three months of its launch, nearly doubling quarter over quarter. Cortex Code, a transformational coding agent, has been embraced by more than 4,400 customers, enabling faster development and deployment of AI-powered applications.
Further expanding its portfolio, in April 2026, Snowflake announced major updates to Snowflake Intelligence and Cortex Code, advancing its vision of becoming the control plane for the agentic enterprise. These enhancements enable businesses to connect data, tools, and AI systems seamlessly, allowing intelligent agents to automate workflows and deliver deeper, context-driven insights. The updates also expand AI-powered development capabilities, helping organizations build, manage and scale enterprise AI directly within their existing ecosystems.
SNOW Offers Positive Guidance
Snowflake’s rich partner base and an innovative portfolio are expected to drive the company’s top-line growth.
For the first quarter of fiscal 2027, Snowflake expects product revenues in the range of $1.262-$1.267 billion. The projection range indicates year-over-year growth of 27%. The operating margin is expected to be 9% for the fiscal first quarter. The Zacks Consensus Estimate for the fiscal first-quarter revenues is currently pegged at $1.32 billion, indicating 26.85% year-over-year growth.
The consensus mark for earnings is currently pegged at 32 cents per share, which has been unchanged over the past 30 days. This suggests an increase of 33.33% year over year.
Snowflake Inc. Price and Consensus
Snowflake Inc. price-consensus-chart | Snowflake Inc. Quote
SNOW Suffers From Stiff Competition
Despite Snowflake’s expanding portfolio and partner base, the company is facing stiff competition from the likes of major players like Oracle (ORCL - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) , which are also expanding their footprint in the AI space.
Oracle’s expanding portfolio has been noteworthy. In April 2026, Oracle expanded AI capabilities in Oracle AI Database@Google Cloud, introducing Gemini-powered agents for natural language data access, enhancing enterprise insights, productivity and multicloud data innovation.
Amazon's AI initiatives gained significant momentum during the first quarter of 2026. Amazon's cloud computing platform, Amazon Web Services' chips business, including Graviton, Trainium, and Nitro, exceeded a $20 billion annual revenue run rate and is growing triple-digit percentages year over year.
Alphabet has been growing rapidly in the booming cloud-computing market. In the first quarter of 2026, Alphabet's cloud revenues surged 63% year over year to roughly $20 billion. This acceleration is largely fueled by enterprise adoption of generative AI offerings such as Gemini, with revenue from AI-based cloud products growing nearly 800% year over year.
SNOW Trading at a Premium
Snowflake shares are currently overvalued, as suggested by its Value Score of F.
SNOW stock is trading at a premium with a forward 12-month Price/Sales of 7.83X compared with the Internet Software industry’s 3.8X.
SNOW Valuation
Image Source: Zacks Investment Research
What Should Investors Do With SNOW Stock?
Despite SNOW’s robust portfolio, challenging macroeconomic uncertainties, rising AI costs and stiff competition from hyperscale cloud providers remain headwinds. Stretched valuation 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.