SNOW Stock Rallies 45% in a Year: Should You Buy, Sell, or Hold?

Core Insights - Snowflake's shares have increased by 45% over the past 12 months, outperforming the Zacks Computer and Technology sector's growth of 25.9% and the Zacks Internet Software industry's growth of 6.6% [1] - The strong performance of Snowflake's stock is attributed to its robust portfolio and expanding partner base, along with high adoption rates of its platform, evidenced by a net revenue retention rate of 125% in Q3 of fiscal 2026 [1] Customer Growth - Snowflake reported a 20% year-over-year increase in the number of customers, reaching 12,621 in Q3 of fiscal 2026 [2] - The company has 688 customers with trailing 12-month product revenues exceeding $1 million, marking a 29% year-over-year increase [2] AI Portfolio Expansion - Snowflake is benefiting from its involvement in the enterprise AI revolution, with strong adoption of its AI capabilities, such as Snowflake Intelligence and Cortex AI, contributing to customer growth [6] - The company has invested in AI and machine learning, with over 7,300 customers using its AI and ML technology weekly [7] - A recent partnership with Alphabet's Google Cloud aims to enhance product integration and market strategy, incorporating Google Cloud's Gemini 3 models into Snowflake Cortex AI [8] Financial Guidance - For Q4 of fiscal 2026, Snowflake expects product revenues between $1.195 billion and $1.2 billion, indicating a year-over-year growth of 27% [11] - The Zacks Consensus Estimate for Q4 revenues is currently at $1.25 billion, reflecting a 26.78% year-over-year growth [11] - For fiscal 2026, Snowflake anticipates product revenues of $4.446 billion, representing a 28% year-over-year growth [12] Valuation and Competition - Snowflake shares are currently trading at a premium, with a forward 12-month Price/Sales ratio of 14.14X compared to the Zacks Internet Software industry's 4.80X [14] - The company faces challenges from rising AI costs and competition from major players like Amazon and Oracle, which are also expanding their AI capabilities [17][18]