Core Viewpoint - Snowflake's recent fiscal second-quarter results show strong growth and improved metrics, but the stock's high valuation raises concerns about its long-term potential [1][2][10] Financial Performance - Fiscal Q2 product revenue increased by 32% year over year to $1.09 billion, with net revenue retention (NRR) rising to 125% [1][4] - Full-year product revenue guidance was raised to approximately $4.4 billion, indicating 27% growth, while Q3 guidance is set between $1.125 billion and $1.130 billion, reflecting 25% to 26% growth [4] - GAAP net loss narrowed to $298 million in Q2 from $430 million in Q1, and improved from a $317 million loss in the same quarter last year [7] - Free cash flow decreased to about $58 million in fiscal Q2, down from $183 million in Q1 and $59 million in the year-ago quarter [9] Customer Metrics - The number of customers spending over $1 million annually reached 654, and remaining performance obligations (RPO) hit $6.9 billion, up 33% year over year [4] - AI is becoming a significant driver for customer acquisition, influencing nearly 50% of new customers in Q2 and powering 25% of all deployed use cases [6] Valuation Concerns - Snowflake's market capitalization is approximately $77 billion, equating to about 19 times sales, which is significantly higher than Alphabet's 8 times and Microsoft's 13 times [10] - The high price-to-sales multiple suggests that investors are expecting near-perfect execution, leaving little room for error [10][11] Future Outlook - Sustained acceleration in product revenue and improving GAAP profitability are necessary for a stronger valuation case [12] - The current stock price does not provide a margin of safety given the significant GAAP losses and stock-based compensation [11][13]