SNOW stock trades near its peak as revenues surge and new AI tools gain traction, but stretched valuation raises questions on further upside.
Snowflake (SNOW) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Snowflake's revamped AI-focused strategy and new product launches are driving strong revenue growth and improved margins, positioning the company well in the AI space. Q1 results showed 25.7% YoY revenue growth, robust RPO, and customer expansion, with management raising full-year product revenue guidance despite a tough macro environment. Margin expansion is gaining traction, with cost-cutting initiatives and AI-driven productivity improvements, though GAAP profitability remains a future goal.
Snowflake grew product revenue 26% YoY in Q1-FY26, with a revised FY26 revenue outlook of $4.325 billion. RPO surged 34% YoY to $6.7 billion, signaling strong multiyear demand across verticals. Net revenue retention rate of 124% reflects deep client expansion, including two new $100M+ financial services contracts in Q1.
SNOW launches Standard Warehouse Gen2 with up to 2.1X faster analytics and 1.9X faster execution, which is expected to fuel growth.
TDC gains ground with strong cloud ARR growth and AI tie-ups, while SNOW faces valuation and spending headwinds.
Snowflake (SNOW) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.
Snowflake Inc (NYSE:SNOW) might already be up 35% this year, but UBS says there's still plenty of runway ahead. The firm upgraded the data cloud company to Buy from Neutral, lifting its 12-month price target to US$265 from US$210—about 27% above where shares closed at US$209.15.
The cloud data company aims to attract customers who want to build their own AI agents.
Shares of Snowflake (SNOW) are moving 0.3% lower to trade at $205.77 this afternoon, but earlier touched a fresh annual high of $209.29 after its composite rating saw a lift to 96. Yesterday brought news of a partnership between the IT name and the 2028 Los Angeles Olympics, and on May 22, the stock enjoyed a post-earnings pop of 13.4%.
When it comes to momentum, few indicators draw more attention than the Relative Strength Index or RSI. Typically, an RSI reading above 70 suggests a stock is overbought, a potential warning sign that it could be due for a pullback.
Snowflake Inc.'s key strength is its user-friendly, cloud-native data platform, enabling rapid data use without deep engineering expertise, justifying its premium pricing. While not the cheapest solution, Snowflake's ease of use and independence from hyperscaler capital expenditures make it attractive for businesses seeking simplicity. Risks include competitive pricing pressure from hyperscalers and margin constraints due to reliance on their infrastructure and high marketing spend.