Snowflake Breaks Out! Can It Drift Higher in 2025 and Beyond?

Snowflake’s (NYSE: SNOW) FQ1 2025 results and guidance update have laid to rest concerns raised by the sudden CEO change last year. The results reveal a game-changing shift, affirming the outlook for sustained 20%+ top-line growth over the long term, growth that will be coupled with widening margins.

The takeaway for investors is that the news and market reaction lifted the stock price by 10% within minutes, reclaiming a critical support level lost in February 2024 when Ramaswamy was appointed CEO, and higher highs are coming. 

The analysts’ response sums it up nicely. The half dozen revisions tracked by MarketBeat within the first day of the release lifted their price targets to an above-consensus level, raising the high-end range by another $10. This puts Snowflake stock at the top of its long-term trading range and potentially at a three-year high by the year’s end.

The takeaway from the notes is that CEO Sridhar Ramaswamy was a much-needed shot in the arm for this business. His alignment of sales and go-to-market teams resonates with clients, as do the new products, and the acceleration of product innovation is expected to help sustain long-term growth. 

Snowflake Melts Up After Solid Report: Business Momentum Is Sustained

Snowflake had a robust Q1 with revenue growing by 25.5% to $1.04 billion and outpacing MarketBeat’s reported consensus by nearly 300 basis points. The gains were driven by a 26% increase in product revenue and a 27% growth in large clients, aided by high retention and sustained, high penetration rates.

The company’s net retention rate, a measure of revenue generated by existing clients, is slowing from phenomenally high levels but remains robust in the mid-120% range. RPO or remaining performance obligation, a measure of unearned but contracted revenue, grew by 34%, suggesting acceleration is possible for this technology company. 

Margin is another area of strength. The company experienced margin pressures during the quarter but mitigated them with revenue leverage and operational efficiency, leaving the GAAP and adjusted EPS above consensus. The adjusted $0.26 grew by 85% year over year, with margins expected to remain strong despite accelerated investment in AI and product innovation. Free cash flow, the metric most important to investors, grew by 20%. 

Snowflake's guidance is as solid as the Q1 results. The company raised its outlook for revenue and profitability to above-consensus levels, forecasting another 25% year-over-year growth in Q2, which is likely a cautious figure. Regarding the balance sheet and financial health, the business outlook is sufficient to sustain Snowflake’s healthy balance sheet. Highlights at the end of Q1 include a solid cash position and low leverage with long-term debt less than 1x equity and cash. 

Institutional Trends Provide Strong Tailwind for Snowflake Price Action

The institutional trends provide a strong tailwind for Snowflake's price action because they own more than 65% of the stock, and their buying activity ramped to record highs in 2025. The group netted over $5 billion in shares, about 8% of the pre-release market cap, and is unlikely to stop buying now.

The likely scenario is that institutions will continue adding to their positions because of the robust and strengthening outlook for revenue growth. 

The question now is whether the market will hold the move. The 10% surge is a significant factor suggesting widespread support for the stock. The risk is that gains will be capped at or near the $195 level until more news is available later in the year.

However, upward drift is likely, and the best target for firm resistance is near the range top at $235. 

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "Snowflake Breaks Out! Can It Drift Higher in 2025 and Beyond?" first appeared on MarketBeat.