Snowflake (SNOW) AI Stock Analysis

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Snowflake

(NYSE:SNOW)

72Outperform

Snowflake's overall score reflects strong revenue growth, robust cash flow management, and positive market momentum. However, challenges include its high valuation, negative earnings, and profitability issues. Positive earnings outlook and strategic board appointments contribute positively, although high liabilities and stock-based compensation remain key concerns.

Positive Factors

Market Expansion

Snowflake is gaining share in an $80B+ DBMS market, while expanding its TAM through new use cases in data engineering and AI/ML.

Product Innovation

Newer products like Snowpark, Iceberg Tables, and Dynamic Tables should drive incremental demand.

Stock Performance

SNOW is currently up 5.5% YTD, vs. the IGV Index decline of 3.7%, indicating strong stock performance relative to the market.

Negative Factors

Executive Changes

CFO Mike Scarpelli announced his retirement sooner than expected.

Generative AI Positioning

There are risks that the company may not be as well positioned as hyperscalers in capitalizing on generative AI opportunities.

Revenue Guidance

Initial FY26 product revenue guidance leaves significantly less room for upside than FY25 guidance, and consumption-based revenue recognition may face macro pressures.

Snowflake (SNOW) vs. S&P 500 (SPY)

Market Cap

$56.28B

Dividend YieldN/A

Average Volume (3M)4.49M

Price to Earnings (P/E)―

Beta (1Y)1.61

Revenue Growth29.21%

EPS Growth-51.47%

CountryUS

Employees7,834

SectorTechnology

Sector Strength66

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.30

Shares Outstanding334,100,000

10 Day Avg. Volume3,816,775

30 Day Avg. Volume4,492,285

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.03

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit24.14

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$204.14

Price Target Upside17.34% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering39

Snowflake Business Overview & Revenue Model

Company DescriptionSnowflake Inc. provides a cloud-based data platform in the United States and internationally. The company's platform offers Data Cloud, which enables customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. Its platform is used by various organizations of sizes in a range of industries. The company was formerly known as Snowflake Computing, Inc. and changed its name to Snowflake Inc. in April 2019. Snowflake Inc. was incorporated in 2012 and is based in Bozeman, Montana.

How the Company Makes MoneySnowflake makes money primarily through a consumption-based revenue model. Customers are charged based on the amount of data stored and the computing resources used on its platform. This model includes charges for data storage, data transfer, and computing resources consumed during data processing and analysis. Snowflake also generates revenue from its data marketplace, where customers can purchase third-party data sets. Key partnerships with major cloud service providers like AWS, Microsoft Azure, and Google Cloud enhance Snowflake's service offerings and expand its customer reach, contributing significantly to its earnings.

Snowflake Key Performance Indicators (KPIs)

Any

Total Customers

Total Customers
Shows the total number of customers, providing a sense of market penetration and overall demand for the company's offerings.

Chart InsightsSnowflake's customer base has consistently expanded, surpassing 11,000 by the end of 2024. This growth aligns with the company's strong product innovation and expanded AI capabilities, as highlighted in their earnings call. However, challenges such as large customers exceeding contract capacity and opting for on-demand purchases could impact future growth dynamics. Despite these challenges, Snowflake's positive cash flow and strategic partnerships, particularly in AI, position it well for continued expansion, albeit with a cautious eye on maintaining customer satisfaction and managing stock-based compensation.

Data provided by:

Main Street Data

Snowflake Financial Statement Overview

Summary

Snowflake shows strong revenue growth and sound cash flow management with a well-managed balance sheet. However, it struggles with profitability, operating at a loss due to high operating expenses and strategic investments impacting margins.

Income Statement

Positive

Snowflake shows robust revenue growth with a 29.23% increase from last year, indicating strong demand and market presence. However, the company is currently operating at a loss with a negative EBIT margin of -40.14% and a net profit margin of -35.46% in TTM, reflecting high operating expenses and significant strategic investments to drive growth.

Balance Sheet

Positive

The balance sheet reflects a healthy equity position with an equity ratio of 34.13%. Snowflake has a manageable debt-to-equity ratio of 0.87, suggesting moderate leverage. However, high liabilities compared to equity may pose financial risks if not managed carefully.

Cash Flow

Positive

Snowflake's cash flow is strong with operating cash flow exceeding net income, indicating efficient cash management. The free cash flow to net income ratio is favorable, and free cash flow increased by 20% year-over-year, suggesting robust liquidity and potential for reinvestment.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
3.63B	2.81B	2.07B	1.22B	592.05M
	Gross Profit
2.41B	1.91B	1.35B	760.89M	349.46M
	EBIT
-1.46B	-1.09B	-842.27M	-715.04M	-543.94M
	EBITDA
-1.10B	-974.87M	-783.63M	-693.54M	-534.11M
	Net Income Common Stockholders
-1.29B	-836.10M	-797.53M	-679.95M	-539.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.64B	3.85B	4.01B	3.85B	3.91B
	Total Assets
9.03B	8.22B	7.72B	6.65B	5.92B
	Total Debt
2.69B	287.98M	251.66M	206.30M	204.54M
	Net Debt
56.47M	-1.47B	-688.24M	-879.43M	-615.64M
	Total Liabilities
6.03B	3.03B	2.25B	1.60B	985.27M
	Stockholders Equity
3.00B	5.18B	5.46B	5.05B	4.94B
Cash Flow		Free Cash Flow
913.49M	750.16M	495.80M	56.85M	-94.12M
	Operating Cash Flow
959.76M	848.12M	545.64M	110.18M	-45.42M
	Investing Cash Flow
190.65M	832.26M	-597.88M	-20.80M	-4.04B
	Financing Cash Flow
-226.52M	-854.10M	-92.62M	178.20M	4.78B

Snowflake Technical Analysis

Technical Analysis Sentiment

Positive

Last Price173.97

Price Trends

50DMA

155.24

Positive

100DMA

164.06

Positive

200DMA

145.50

Positive

Market Momentum

MACD

5.26

Negative

RSI

68.41

Neutral

STOCH

91.39

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNOW, the sentiment is Positive. The current price of 173.97 is above the 20-day moving average (MA) of 155.22, above the 50-day MA of 155.24, and above the 200-day MA of 145.50, indicating a bullish trend. The MACD of 5.26 indicates Negative momentum. The RSI at 68.41 is Neutral, neither overbought nor oversold. The STOCH value of 91.39 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SNOW.

Snowflake Risk Analysis

Snowflake disclosed 54 risk factors in its most recent earnings report. Snowflake reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Snowflake Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WDAY	79 Outperform	$66.56B	127.01	6.15%	―	16.94%	-62.24%
DDOG	77 Outperform	$36.59B	229.77	6.48%	―	25.54%	40.02%
ADSK	73 Outperform	$59.64B	54.65	49.69%	―	12.35%	22.28%
SNOW	72 Outperform	$56.28B	―	-31.43%	―	29.21%	-51.47%
HUBS	70 Outperform	$33.47B	7,452.21	0.29%	―	21.07%	―
TEAM	70 Outperform	$54.73B	―	-34.33%	―	19.12%	-161.42%
Sector *	60 Neutral	$10.83B	10.47	-6.71%	2.99%	7.73%	-12.97%

* Technology Sector Average

Performance Comparison

SNOW

Snowflake

173.97

16.82

10.70%

ADSK

Autodesk

289.62

71.85

32.99%

WDAY

Workday

257.98

11.64

4.73%

HUBS

HubSpot

660.36

62.41

10.44%

TEAM

Atlassian

208.22

28.47

15.84%

DDOG

Datadog

109.22

-9.75

-8.20%

Snowflake Earnings Call Summary

Earnings Call Date:Feb 26, 2025

(Q4-2025)

% Change Since: 4.68%|

Next Earnings Date:May 21, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue growth, high net revenue retention, significant product innovation, and expanded AI capabilities. However, there were challenges, including large customers exceeding contract capacity and needing to purchase on-demand, slower projected growth for Q1 due to leap year effects, and high stock-based compensation. Overall, the sentiment is positive given the strong growth and innovation, although tempered by some challenges.

Q4-2025 Updates

Positive Updates

Strong Revenue Growth

Product revenue for Q4 was $943 million, up 28% year-over-year, with remaining performance obligations totaling $6.9 billion, growing 33% year-over-year.

High Net Revenue Retention

Net revenue retention was a healthy 126%, indicating strong customer satisfaction and continued usage.

New Product Introductions

Snowflake introduced over 400 product capabilities to market, more than double the previous year, showing strong product innovation.

Positive Cash Flow and Margins

Q4 non-GAAP operating margin increased to 9%, and non-GAAP adjusted free cash flow margin was 43%.

Expansion of AI Capabilities

Introduced Cortex AI and expanded partnerships with Microsoft to incorporate OpenAI's models, making Snowflake the only platform hosting both Anthropic's and OpenAI's models.

Negative Updates

Large Customers Exceeding Contract Capacity

Several large customers ran out of capacity before their contract end date, choosing to purchase as they consume rather than renewing.

Q1 Revenue Growth Projections

Q1 product revenue is expected to grow only 21% to 22% year-over-year, partially due to the impact of leap year.

Stock-Based Compensation

Stock-based compensation as a percentage of revenue is expected to decrease from 41% to 37% in FY '26, which remains relatively high.

Company Guidance

During Snowflake's Q4 fiscal 2025 earnings call, the company provided guidance for the first quarter and full year of fiscal 2026. Product revenue for Q1 is expected to be between $955 million and $960 million, reflecting a year-over-year growth of 21% to 22%. For the full fiscal year 2026, Snowflake anticipates product revenue of approximately $4.28 billion, representing a 24% year-over-year increase. The company also expects a non-GAAP operating margin of 5% in Q1, with FY '26 non-GAAP operating margin expanding to 8% and non-GAAP adjusted free-cash flow margin at 25%. Additionally, Snowflake forecasts its stock-based compensation as a percentage of revenue to decrease to approximately 37% from 41%, indicating an ongoing effort to improve efficiency and leverage AI for operational gains.

Snowflake Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Snowflake Appoints Bill Scannell to Board of Directors

Positive

May 8, 2025

On May 7, 2025, Snowflake appointed Bill Scannell, a seasoned executive from Dell Technologies, to its Board of Directors. Scannell’s extensive experience in global sales and customer operations is expected to bolster Snowflake’s growth and strategic positioning in the AI and data cloud industry. His appointment reflects Snowflake’s commitment to leveraging experienced leadership to empower enterprises to fully utilize data and AI, reinforcing its leadership in the AI era.

Spark’s Take on SNOW Stock

According to Spark, TipRanks’ AI Analyst, SNOW is a Neutral.

Snowflake’s strong revenue growth and cash flow management are significant strengths, but the company faces profitability challenges and valuation concerns due to its high operating expenses and negative earnings. Despite these challenges, the positive earnings call outlook and product innovation support a moderately positive score.

To see Spark’s full report on SNOW stock, click here.

Executive/Board Changes

Snowflake CFO Michael Scarpelli Announces Retirement

Neutral

Feb 26, 2025

On February 25, 2025, Snowflake Inc. announced that its Chief Financial Officer, Michael P. Scarpelli, intends to retire. The company is actively searching for his successor. Scarpelli will remain in his role until a successor is appointed and will then transition to an advisory role to ensure a smooth transition. A consulting agreement has been established for Scarpelli to serve as an independent contractor for 12 months post-departure, with his equity awards continuing to vest during this period.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.