Snowflake SNOW shares have gained 16.2% in the past year, underperforming the Zacks Computer and Technology sector’s rise of 53.3%.
The company's shares have also underperformed its peers like Oracle ORCL and Alphabet GOOGL. Both Oracle and Alphabet are also expanding their footprint in the AI space. Oracle and Alphabet shares have surged 38.1% and 121.2%, respectively, over the past year.
The underperformance can be attributed to lower gross margins from new AI products like Cortex Code compared to Snowflake’s core platform. Integration and hiring tied to acquisitions also weigh on free cash flow margins. Stiff competition also remains a concern.
However, the company has outperformed the Zacks Internet Software industry, which has declined 11.3% in the past year. The outperformance can be attributed to SNOW’s strong adoption and increasing usage of its platform, as reflected by the net revenue retention rate of 126% in the first quarter of fiscal 2027.
SNOW Stock Performance
Image Source: Zacks Investment Research
In the first quarter of fiscal 2027, Snowflake reported 13,912 total customers and added 616 net new customers, up 38% year over year. The company now has 779 customers spending more than $1 million annually, up 29% year over year, and the number of customers spending more than $10 million annually increased to 64.
SNOW Benefits From Expanding Portfolio
SNOW is benefiting from an expanding portfolio that is driving both accelerated growth and deeper customer engagement. In the first quarter of fiscal 2027, Product revenue grew 34% year over year, with AI products like Cortex Code and Snowflake Intelligence seeing the fastest adoption in company history. Snowflake expects fiscal second-quarter 2027 product revenues in the range of $1.415-$1.420 billion, implying 30% year-over-year growth.
The introduction and rapid adoption of products like Snowflake Intelligence and Cortex Code remain noteworthy. In the fiscal first quarter, Snowflake delivered more than 20% more product capabilities than last year. This includes new features in Cortex Code (CoCo) and Snowflake Intelligence. These products are seeing the fastest uptake in Snowflake’s history, with CoCo already in use by more than 7,100 accounts and Snowflake Intelligence more than doubling quarter over quarter.
Further expanding its portfolio, Snowflake recently announced major enhancements to Snowflake CoCo, its AI coding agent, enabling autonomous task execution, app development, workflow automation, and integrations across desktop, mobile, Slack, VS Code, and other developer tools. The company also introduced Snowflake Datastream, a fully managed Kafka-compatible streaming service that brings real-time data and AI together on a single governed platform, helping organizations build and deploy real-time AI applications faster and more efficiently.
SNOW Expands AI Reach via Partnerships
SNOW is benefiting from a strategic expansion of its AI reach through deepening partnerships and innovative product launches. In the first quarter of fiscal 2027, new customers such as Holiday Inn Club Vacations and Houzz selected Snowflake as the foundation for their data and AI transformation initiatives. The adoption of Snowflake AI capabilities continued to expand, with more than 13,600 accounts now leveraging these solutions.
A key driver of Snowflake’s momentum is its expanded collaborations with Amazon’s AMZN cloud computing platform, Amazon Web Services. In May 2026, Snowflake announced a new $6 billion multiyear agreement with Amazon Web Services to accelerate enterprise AI adoption globally, leveraging Amazon’s AWS Graviton compute and AI services. This partnership builds on Snowflake’s surpassing of $7 billion in lifetime AWS Marketplace sales, reflecting the growing demand for AI and data workloads on its platform.
The company recently expanded its momentum in its strategic partnership with Anthropic, helping enterprises deploy governed, production-ready AI and AI agents on critical business data through Claude models integrated into Snowflake Cortex AI.
SNOW Offers Positive Guidance
Snowflake’s rich partner base and innovative portfolio are expected to drive the company’s top-line growth.
The Zacks Consensus Estimate for fiscal second-quarter revenues is currently pegged at $1.47 billion, indicating 28.39% year-over-year growth.
The consensus mark for earnings is currently pegged at 43 cents per share, which has been unchanged over the past 30 days. This suggests an increase of 22.86% year over year.
Snowflake Inc. Price and Consensus
Snowflake Inc. price-consensus-chart | Snowflake Inc. Quote
SNOW Trades 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 12.97X compared with the Internet Software industry’s 3.96X.
SNOW Valuation
Image Source: Zacks Investment Research
What Should Investors Do With SNOW Stock?
Despite SNOW’s robust portfolio, the company suffers from challenging macroeconomic uncertainties and variability of consumption as customers optimize spend on AI products that carry lower gross margins than the core platform. Stiff competition and stretched valuation also remain concerns.
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).