SNOW Up 17% in Three Months: Should You Buy, Sell, or Hold the Stock?

Core Insights - Snowflake (SNOW) shares have increased by 16.7% over the past three months, outperforming the Zacks Computer and Technology sector's growth of 15.7% and the Zacks Internet Software industry's increase of 3.9% during the same period [1][10] - The company's strong performance is attributed to its expanding portfolio and partner base, along with a high net revenue retention rate of 125% in Q2 FY26 [2][3] Company Performance - Snowflake reported a 19% year-over-year growth in customer numbers, reaching 12,062 in Q2 FY26, with 654 customers generating over $1 million in trailing 12-month product revenues [3] - The company launched approximately 250 new capabilities in the first half of FY26, enhancing data management and AI-driven insights [6][10] AI and Partnerships - Snowflake's investments in AI and machine learning, including the introduction of Cortex AI, have driven customer engagement, with over 6,100 customers using its AI and ML technology weekly [7][8] - The company has a strong partner base, including Microsoft, AWS, NVIDIA, and others, which has significantly contributed to its growth [11][12] Financial Guidance - For Q3 FY26, Snowflake expects product revenues between $1.125 billion and $1.13 billion, indicating a year-over-year growth of 25% to 26% [13] - The Zacks Consensus Estimate for Q3 FY26 revenues is $1.18 billion, reflecting a 25.27% year-over-year growth, with earnings expected to increase by 55% year-over-year [14] Competitive Landscape - Snowflake faces stiff competition from Amazon in the AI Data Cloud space, particularly through AWS and its Redshift service [15][16] - The company is currently trading at a premium, with a forward 12-month Price/Sales ratio of 15.98X compared to the industry average of 5.49X [17] Cost Pressures - Elevated infrastructure spending, especially on GPUs for AI initiatives, is contributing to cost pressures, with a projected non-GAAP operating margin of 9% for Q3 FY26 [20]