Snowflake Rides on Growing Customer Base: More Upside Ahead?

Core Insights - Snowflake (SNOW) is experiencing significant growth, with a 20% year-over-year increase in its customer base, reaching 12,621 customers in Q3 of fiscal 2026 [1][10] - The company's AI capabilities are a major driver of its success, achieving a $100 million AI revenue run rate a quarter earlier than anticipated, with 1,200 customers utilizing the Snowflake Intelligence platform [2][10] - Snowflake has surpassed $2 billion in sales through the Amazon Web Services (AWS) Marketplace, doubling its year-over-year growth, and is enhancing its partnership with AWS through new innovations [4][10] Customer Growth and Revenue - The number of customers with trailing 12-month product revenues exceeding $1 million has increased by 29% year-over-year, totaling 688 [1] - Snowflake has 766 customers from the Forbes Global 2000 list, indicating strong adoption among large enterprises [1] AI and Technology Adoption - The rapid adoption of Snowflake's AI platform is transforming business data interactions, contributing significantly to revenue growth [2] - The company is focused on modernizing data platforms and creating AI-ready architectures through collaborations with AWS [4] Competitive Landscape - Snowflake faces intense competition from major players like Amazon and Alphabet in the cloud data and analytics market [5] - Alphabet's Google Cloud is expanding rapidly, with a 46% sequential increase in backlog and a 34% year-over-year rise in new customers [6] - Amazon's AWS continues to secure new agreements, indicating strong demand for its cloud services [7] Stock Performance and Valuation - Snowflake shares have decreased by 0.4% over the past six months, underperforming the Zacks Computer & Technology sector's 20.1% return but outperforming the Zacks Internet Software industry's decline of 6.3% [8][10] - The stock is trading at a forward 12-month Price/Sales ratio of 13.56X, significantly higher than the Internet Software industry's 4.86X [11] - The Zacks Consensus Estimate for SNOW's fiscal 2026 earnings is $1.20 per share, reflecting a 44.58% year-over-year increase [13]