Snowflake SNOW shares have plunged 18.1% in the trailing 12 months, underperforming the Zacks Computer & Technology sector’s appreciation of 30.8% and the Zacks Internet – Software industry’s return of 32.3%.

SNOW has been suffering from stiff competition from companies like Databricks, increasing pricing pressures and growing GPU-related costs as it aggressively invests in AI initiatives.

One-Year Performance

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SNOW is currently overvalued, as suggested by the Value Score of F.

In terms of the forward 12-month price/sales, SNOW is trading at 12.5X, higher than the industry’s 2.96X.

Price/Sales Ratio (F12M)

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Snowflake’s prospects are robust, driven by a strong portfolio and an expanding partner base.

The stock is currently trading above the 50-day and 200-day moving averages, indicating a bullish trend.

SNOW Stock Trades Above the 50-Day & 200-Day SMA

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Strong Portfolio Aids SNOW’s Prospects

Snowflake benefits from a strong portfolio with new capabilities, including Unistore, Marketplace Listing Auto-Fulfillment, Query Acceleration Service, geospatial analytics, Snowpark and Snowpipe Streaming.

Innovations like Iceberg and Hybrid tables, Polaris, Cortex Large Language Model and machine learning functions further strengthen SNOW’s offerings. More than 3,200 accounts adopted SNOW’s AI and ML features in the third quarter of fiscal 2025, and approximately 500 accounts adopted Iceberg.

Partnerships with major players like Amazon, Microsoft MSFT, ServiceNow NOW, NVIDIA, Fiserv, EY, Deloitte, LTMindtree, Next Pathway and S&P Global expand SNOW’s ecosystem.

Snowflake has expanded its partnership with Microsoft and ServiceNow to improve data interoperability, making it easier for customers to move data in and out of Snowflake and develop applications faster.

SNOW’s recent partnership with Anthropic integrates advanced AI models into Cortex AI, supporting secure and flexible AI applications. These efforts aim to counter the fierce market competition and address pricing pressures in a rapidly evolving data platform market.

Industry leaders like Disney DIS, Hyatt Hotels, Comcast, Accor and Toyota rely on SNOW’s platform. Disney is leveraging it for in-park optimization, while Hyatt Hotels is using it to enhance guest experiences across its properties.

The planned acquisition of Datavolo strengthens Snowflake’s platform, offering enhanced support for structured and unstructured data while simplifying data engineering tasks.

SNOW’s Earnings Estimates Indicate Positive Trend

For the fourth quarter of fiscal 2025, Snowflake expects product revenues of $906-$911 million. The projection range indicates year-over-year growth of 23%.

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $952.55 million, indicating 22.6% year-over-year growth.

The consensus mark for earnings is pegged at 17 cents per share, which moved up 41.67% over the past 30 days. The estimate suggests a year-over-year decrease of 51.43%.

For fiscal 2025, Snowflake expects product revenues to increase 29% year over year to $3.43 billion. The non-GAAP product gross margin is expected to be 76% and the non-GAAP operating margin is likely to be 5%.

The Zacks Consensus Estimate for SNOW’s fiscal 2025 revenues is pegged at $3.59 billion, indicating year-over-year growth of 28%.

The consensus mark for earnings is pegged at 68 cents per share, rising 17.24% over the past 30 days. The estimate suggests a year-over-year decrease of 30.61%.

SNOW has beaten the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 35.39%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Buy, Sell or Hold the SNOW Stock?

Snowflake benefits from a solid portfolio, a rich partner base and an expanding clientele but is weighed down by competitive pressures, rising costs and a stretched valuation.

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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