Should You Buy, Sell, or Hold Snowflake Stock Post Q3 Earnings?

Core Insights - Snowflake (SNOW) shares have declined by 11.4% since the announcement of its third-quarter fiscal 2026 results, primarily due to a hyperscaler outage that impacted revenues by approximately $1 million to $2 million [1][8] - Despite the recent decline, SNOW shares have increased by 27.9% over the past year, outperforming the Zacks Computer and Technology sector's growth of 25% and the Zacks Internet Software industry's decline of 1% [2] Financial Performance - For the fourth quarter of fiscal 2026, Snowflake expects product revenues between $1.195 billion and $1.2 billion, indicating a year-over-year growth of 27% [15] - The company anticipates total product revenues of $4.446 billion for fiscal 2026, reflecting a 28% year-over-year growth [16] - The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues is currently at $1.23 billion, suggesting a growth of 24.99% year-over-year [15] Customer and Market Growth - Snowflake reported a 20% year-over-year growth in the number of customers, reaching 12,621 in the fiscal third quarter of 2026 [11] - The company has 688 customers with trailing 12-month product revenues exceeding $1 million, a 29% increase year-over-year [11] - More than 7,300 customers are utilizing Snowflake's AI and machine learning technology weekly [9] Product and Technology Advancements - Snowflake has introduced 370 new GA product capabilities year-to-date, marking a 35% increase over the previous year [5] - AI has significantly influenced the company's performance, accounting for 50% of bookings signed during the fiscal third quarter [6] - The introduction of Snowflake Intelligence, an agentic AI platform, has seen rapid adoption with 1,200 customers leveraging its capabilities [7] Strategic Partnerships - Snowflake's strong partner base includes major players such as SAP, Microsoft, Amazon Web Services (AWS), NVIDIA, and others, which has been a significant growth driver [10] - The company has surpassed $2 billion in AWS Marketplace sales, doubling year-over-year growth [12] - Recent collaborations with NVIDIA and SAP aim to enhance AI capabilities and data integration [13][14] Valuation and Market Position - Snowflake shares are currently considered overvalued, with a forward 12-month Price/Sales ratio of 14.55X compared to the Internet Software industry's 4.83X [18] - The consensus estimate for earnings per share is pegged at 29 cents, indicating a decline of 3.33% year-over-year [16]