Snowflake Set to Report Q3 Earnings: Buy, Hold or Sell SNOW Stock?

Core Viewpoint - Snowflake (SNOW) is expected to report its third-quarter fiscal 2025 results on November 20, with revenue estimates indicating a 22.42% increase year-over-year, while earnings per share are projected to decrease by 40% compared to the previous year [1][5]. Financial Performance - The Zacks Consensus Estimate for revenues is $898.77 million, reflecting a significant year-over-year growth [1]. - SNOW's earnings have beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 43.73% [2]. Market Conditions - SNOW faces challenging macroeconomic conditions, including persistent inflation affecting customer spending, increased GPU-related costs due to investments in AI, and competitive pricing pressure from rivals like Databricks [5]. Growth Drivers - Despite challenges, SNOW's top-line growth is supported by a strong portfolio of new capabilities, including Marketplace Listing Auto-Fulfillment & Monetization, account replication & failover, and Snowpipe Streaming [6][12]. - The company has introduced several innovations, such as Iceberg and Cortex LLM-powered functions, which are expected to enhance long-term prospects through increased demand and competitive differentiation [13]. Strategic Partnerships - SNOW benefits from an expanding partner base, including major companies like Amazon, Microsoft, and NVIDIA, which enhances its ability to build customized AI data applications [17][18]. - Recent collaborations with Microsoft aim to improve interoperability between Snowflake and Microsoft Fabric OneLake, leveraging open standards for analytical storage formats [19][20]. Client Base and Adoption - SNOW's growing client base includes industry leaders such as Disney, Capital One, and Pfizer, showcasing its increasing adoption across various sectors [21]. Stock Performance - SNOW shares have underperformed, declining 36.6% compared to the Zacks Computer & Technology sector's return of 25.7% and the S&P 500's 23.5% [7]. - The stock is currently trading at a premium, with a forward 12-month price-to-sales ratio of 10.16X, compared to the sector's 6.13X, indicating a stretched valuation [10].