Snowflake Gains 17% Post Q2 Earnings: Buy, Sell or Hold the Stock?
Yahoo Finance ·
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 second quarter of fiscal 2027. Snowflake is benefiting from a strong enterprise AI push as organizations increasingly use its AI Data Cloud to modernize data estates, deploy agents and automate business workflows. This momentum helped product revenues rise 37% year over year to $1.49 billion in the second fiscal quarter, accounting for 96% of total revenues and marking another quarter of accelerating growth. Enterprise expansion remains another key catalyst. In the second quarter of fiscal 2027, SNOW had 14,554 total customers after adding 692 net new customers, a 32% year-over-year increase in net additions. The company added 14 Forbes Global 2000 customers, taking that total to 829. Large-customer momentum remained strong, with 828 customers generating more than $1 million in trailing 12-month product revenues, up 27% year over year. Another 65 customers exceeded $10 million in trailing product revenues. The adoption of Snowflake's AI offerings remains noteworthy. In the second quarter of fiscal 2027, CoCo surpassed 9,100 accounts after adding more than 2,000 during the quarter, while CoWork expanded to 5,800 accounts, up nearly 11% sequentially. Customers including 1Password and Indeed are deploying these solutions to accelerate data and AI initiatives. Snowflake's expanding AI portfolio has been noteworthy. The company has rapidly broadened its suite of AI-powered products, including CoCo and CoWork, which are seeing strong adoption across a diverse customer base. The company launched more than 330 generally available product capabilities during the first half, including Cortex Sense and Cortex AI Gateway, strengthening its ability to offer governed AI, model choice and agentic workflows. Further strengthening its AI strategy, in August 2026, Snowflake announced dynamic model routing across Cortex AI Gateway and its flagship AI products, enabling enterprises to balance AI quality and costs by automatically selecting the most suitable model for each task. The company also expanded access to leading open models, strengthening its AI capabilities and helping customers improve the efficiency of their intelligence. Strong AI demand is improving Snowflake's financial outlook. For fiscal 2027, the company raised product revenue guidance to $6.07 billion, implying 36% year-over-year growth compared with its previous outlook of $5.84 billion and 31% growth. Fiscal third-quarter product revenues are expected to be between $1.588 billion and $1.593 billion, indicating 37-38% growth. Snowflake's rich partner base and innovative AI portfolio are expected to drive the company's top-line growth. The Zacks Consensus Estimate for the fiscal third-quarter 2026 revenue is currently pegged at $1.57 billion, indicating 29.07% year-over-year growth. The consensus mark for earnings is currently pegged at 53 cents per share, which has been unchanged over the past 30 days. This suggests an increase of 51.43% year over year. Snowflake Inc. price-consensus-chart | Snowflake Inc. Quote 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 17.69X compared with the Internet Software industry's 3.97X, Oracle's 4.43X, Alphabet's 8.27X and Amazon's 3.07X. Snowflake's accelerating AI adoption, strong enterprise momentum, and raised product revenue guidance support a positive outlook for the stock. These factors have justified its premium valuation. SNOW stock currently carries a Zacks Rank #2 (Buy), which implies that investors should start accumulating the stock right now. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here . Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Snowflake Inc. (SNOW) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Oracle Corporation (ORCL) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com).
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