SNOW Stock Rallies 45% in a Year: Should You Buy, Sell, or Hold?

Snowflake’s SNOW shares have soared 45% over the trailing 12-month period, outperforming the Zacks Computer and Technology sector’s appreciation of 25.9% and the Zacks Internet Software industry’s growth of 6.6%. 

The outperformance in SNOW stock is driven by its strong portfolio and an expanding partner base. The company also benefits from strong adoption and increasing usage of its platform, as reflected by the net revenue retention rate of 125% in the third quarter of fiscal 2026.

SNOW reported 20% year-over-year growth in the number of customers, reaching 12,621 in the fiscal third quarter of 2026. The company now has 688 customers with trailing 12-month product revenues exceeding $1 million (up 29% year over year) and 766 Forbes Global 2,000 customers.

SNOW Stock Performance

SNOW Benefits From Expanding AI Portfolio

Snowflake benefits from its role in the enterprise AI revolution, with strong adoption of its AI capabilities, such as Snowflake Intelligence and Cortex AI, driving customer growth. 

The company’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. In the third quarter of fiscal 2026, the company announced that more than 7,300 customers are using Snowflake’s AI and ML technology weekly. 

Further expanding its portfolio, Snowflake recently expanded its partnership with Alphabet’s GOOGL cloud computing platform Google Cloud to improve product integration and market strategy. This integration brings Alphabet’s Google Cloud Gemini 3 models directly into Snowflake Cortex AI.  

Enterprises can build and scale generative AI applications securely and with governed data, without data movement. The partnership also includes global expansion, marketplace co-selling, and infrastructure upgrades that enhance price and performance on Alphabet’s Google Cloud.

Snowflake’s focus on AI has been a key catalyst, with AI influencing 50% of bookings signed during the fiscal third quarter. The company achieved a $100 million AI revenue run rate one quarter earlier than expected, reflecting strong enterprise adoption of its AI capabilities.

SNOW Offers Positive Q4 and FY26 Guidance

Snowflake’s rich partner base and an innovative portfolio are expected to drive the company’s top-line growth.

For the fourth quarter of fiscal 2026, Snowflake expects product revenues in the range of $1.195-$1.2 billion. The projection range indicates year-over-year growth of 27%. The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues is currently pegged at $1.25 billion, indicating 26.78% year-over-year growth. 

The consensus mark for earnings is currently pegged at 26 cents per share, which has declined by a penny over the past 30 days. This suggests a decline of 13.33% year over year.

For fiscal 2026, Snowflake expects product revenues of $4.446 billion, indicating 28% year-over-year growth. The Zacks Consensus Estimate for fiscal 2026 revenues is currently pegged at $4.65 billion, indicating 28.17% year-over-year growth. 

The consensus mark for earnings is currently pegged at $1.20 per share, which has declined by a penny over the past 30 days. This suggests an increase of 44.58% year over year.

Snowflake Inc. Price and Consensus

Snowflake Inc. price-consensus-chart | Snowflake Inc. Quote

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 14.14X compared with the Zacks  Internet Software industry’s 4.80X.

SNOW Valuation

SNOW Suffers From Rising AI Costs and Stiff Competition

Despite Snowflake’s expanding portfolio and partner base, the company is suffering from challenging macroeconomic uncertainties and elevated infrastructure spending, particularly on GPUs to support AI-driven initiatives, which is adding to cost pressures.

The company is facing stiff competition from the likes of major players like Amazon AMZN and Oracle ORCL, which are also expanding their footprint in the AI space. Elevated infrastructure spending, particularly on GPUs to support AI-driven initiatives, is adding to cost pressures.

Amazon’s AI initiatives gained significant momentum during the third quarter of 2025, representing a strategic priority across the company. In the third quarter of 2025, Amazon launched Project Rainier, a massive AI compute cluster containing nearly 500,000 Trainium2 chips specifically designed to build and deploy Anthropic’s Claude AI models. Trainium2, Amazon’s custom AI chip, saw continued strong adoption and grew 150% quarter over quarter, becoming a multi-billion-dollar business that is now fully subscribed. 

Oracle’s expanding portfolio has been noteworthy. In October 2025, Oracle announced the Oracle Fusion Applications AI Agent Marketplace. This new embedded marketplace allows Fusion Cloud customers to easily find, use, and customize approved, partner-built AI agents. These agents help speed up secure, large-scale AI adoption in finance, HR, supply chain, and customer experience.

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.

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This article originally published on Zacks Investment Research (zacks.com).

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