In This Article:
Snowflake SNOW shares are currently overvalued, as suggested by its Value Score of F.
In terms of the 12-month price/sales (P/S), SNOW is trading at 13.13X, higher than its median of 12.39X and the Zacks Internet – Software industry’s 3.11X.
At such a high valuation, the question that arises is whether the SNOW stock is still a worthy investment. Let us dig deeper to find out.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
In the trailing 12 months, SNOW shares have plunged 16.9%, underperforming the Zacks Computer and Technology sector’s appreciation of 27.4% and the industry’s return of 32.3%.
SNOW has been facing tough competition from rivals like Databricks, coupled with rising pricing pressures and escalating GPU-related costs, as Snowflake is aggressively investing in AI initiatives.
One Year Performance
Image Source: Zacks Investment Research
However, 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 50-Day & 200-Day SMAs
Image Source: Zacks Investment Research
Strong Partner Network Aids Snowflake’s Prospects
SNOW benefits from a strong partner base that includes major players like Amazon AMZN, ServiceNow NOW, Microsoft MSFT, NVIDIA, Fiserv, EY, Deloitte, LTMindtree, Next Pathway and S&P Global.
SNOW’s partnership with ServiceNow is improving data interoperability, making it easier for customers to move data in and out of Snowflake and develop applications faster.
Snowflake has also partnered with Microsoft to establish a Snowflake Power Platform connector for Microsoft Power Platform, enabling bidirectional access between Dataverse and SNOW’s AI Data Cloud. The connector simplifies data interoperability between Microsoft’s service suite, Dynamics 365 and the Snowflake AI Data Cloud.
Snowflake’s partnership with Anthropic integrates advanced AI models into Cortex AI, supporting secure and flexible AI applications. These efforts are aimed at countering the fierce market competition and addressing pricing pressures in a rapidly evolving data platform market.
Innovations like Iceberg and Hybrid tables, Polaris, Cortex Large Language Model and machine learning functions are being utilized by industry leaders such as Disney, Hyatt Hotels, Comcast, Accor and Toyota. Disney is leveraging SNOW’s platform for in-park optimization, while Hyatt Hotels is using it to enhance guest experiences across its properties.