Is SNOW Stock a Buy, Hold, or Sell After a 19% Decline in Three Months?

Snowflake SNOW shares have lost 18.9% in the past three months, underperforming the Zacks Computer and Technology sector’s decline of 6.7% and the Zacks Internet Software industry’s decrease of 11.5%.

SNOW shares have declined as the company’s free cash flow margin faced a 150-basis-point headwind in the fourth quarter of fiscal 2026 due to the Observe acquisition. Stiff competition also remains a concern. Snowflake’s margins are impacted by the lower margin profile of new AI products and potential infrastructure costs associated with supporting AI-driven initiatives.

SNOW Stock's Performance

Image Source: Zacks Investment Research

However, SNOW is benefiting from strong adoption and increasing usage of its platform, as reflected by the net revenue retention rate of 125% in the fourth quarter of fiscal 2026. 

In the fourth quarter of fiscal 2026, Snowflake added 740 net new customers, up 40% year over year. The company now has 733 customers spending more than $1 million annually, up 27% year over year, and 56 customers spending more than $10 million annually, up 56% year over year.

SNOW Benefits From Expanding Portfolio

SNOW’s expanding portfolio has been noteworthy. In 2026, Snowflake launched more than 430 product capabilities, including Snowflake Intelligence, Cortex Code, Snowflake OpenFlow, and Snowflake Postgres. These innovations enhanced the platform’s usability and scalability.

The company’s AI-driven products, particularly Snowflake Intelligence and Cortex Code, have been a major growth driver. In 2026, Snowflake Intelligence, which provides enterprise-grade agent capabilities, has been adopted by more than 2,500 accounts within just three months of its launch, nearly doubling quarter-over-quarter.  Cortex Code, a transformational coding agent, has been embraced by more than 4,400 customers, enabling faster development and deployment of AI-powered applications.

Further expanding its portfolio, Snowflake announced that its Cortex Code CLI is expanding beyond Snowflake-native workflows to support dbt and Apache Airflow, adding broader AI model choice, including offerings from Anthropic and OpenAI, plus new governance controls and a standalone subscription plan to bring secure, AI-powered development to any data engineering environment.

SNOW Benefits From Expanding Partnerships

Snowflake’s expanding partnership with Alphabet’s GOOGL cloud computing platform Google Cloud has been noteworthy. In January 2026, Snowflake expanded its partnership with Alphabet’s Google Cloud to improve product integration and market strategy. This integration brings Alphabet’s Google Cloud Gemini 3 models directly into Snowflake Cortex AI.  

Enterprises can build and scale generative AI applications securely and with governed data, without data movement. The partnership also includes global expansion, marketplace co-selling and infrastructure upgrades that enhance price and performance on Alphabet’s Google Cloud.

In fiscal 2026, the company signed its largest deal ever, worth more than $400 million, along with seven additional nine-figure contracts, reflecting customer confidence in its AI strategy and product roadmap.

SNOW Offers Positive Guidance

Snowflake’s rich partner base and an innovative portfolio are expected to drive the company’s top-line growth.

For the first quarter of fiscal 2027, Snowflake expects product revenues in the range of $1.262-$1.267 billion. The projection range indicates year-over-year growth of 27%. The operating margin is expected to be 9% for the fiscal first quarter. The Zacks Consensus Estimate for the fiscal first-quarter revenues is currently pegged at $1.32 billion, indicating 26.63% year-over-year growth. 

The consensus mark for earnings is currently pegged at 33 cents per share, which has declined by a couple of pennies over the past 30 days. This suggests a decrease of 37.5% year over year.

SNOW Suffers From Stiff Competition

Despite Snowflake’s expanding portfolio and partner base, the company is facing stiff competition from the likes of major players like Amazon AMZN and Oracle ORCL, which are also expanding their footprint in the AI space.

Oracle’s expanding portfolio has been noteworthy. The company recently launched role-based AI agents in Oracle Fusion Cloud CX. These agents automate marketing, sales, and service tasks. They provide predictive, data-driven help right within business operations through AI Agent Studio.

Amazon’s AI initiatives gained significant momentum during the fourth quarter of 2025, representing a strategic priority across the company. Amazon's cloud computing platform AWS’s custom chips business, including Trainium and Graviton, now has a combined annual revenue run rate of more than $10 billion and is growing at triple-digit percentages year over year.

SNOW Is Trading at a Premium

Snowflake shares are currently overvalued, as suggested by its Value Score of F.

SNOW stock is trading at a premium with a forward 12-month Price/Sales of 10.25X compared with the Internet Software industry’s 4.03X.

SNOW's Valuation

Image Source: Zacks Investment Research

What Should Investors Do With SNOW Stock?

Despite SNOW’s robust portfolio, challenging macroeconomic uncertainties, rising AI costs, and stiff competition from hyperscale cloud providers remain headwinds. Stretched valuation remains a concern.

SNOW currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.