Can SNOW's Expanding Clientele Push the Stock Higher in 2025?

Snowflake SNOW shares have climbed 5.7% year to date, driven by a strong portfolio and an expanding partner base that has been a key catalyst in expanding clientele. As of Jan. 31, 2025, SNOW had 11,159 customers, increasing from 9,384 customers as of Jan. 31, 2024. The clientele included 745 of the Forbes Global 2000 and accounted for 45% of SNOW’s fiscal 2025 revenues of $3.6 billion, up 29% over fiscal 2024.

Snowflake is benefiting from strong adoption and increasing usage of its platform, as reflected by a net revenue retention rate of 126% as of Jan. 31, 2025. The number of customers that contributed more than $1 million in trailing 12-month product revenue increased from 455 to 580 as of Jan. 31, 2024 and 2025, respectively. 

SNOW has been benefiting from an innovative portfolio and frequent updates. SNOW added over 400 product capabilities in fiscal 2025, more than double what it launched in the previous year. The company now has more than 4000 customers using its AI and machine learning technologies on a weekly basis.

SNOW Stock's Performance

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

In terms of the 12-month price/sales (P/S), SNOW is trading at 11.69X, higher than the industry’s 5.08X.

Price/Sales Ratio (F12M)

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At such a high valuation, the question that arises is whether the SNOW stock is still a worthy investment. Let us dig deep to find out.

SNOW Rides on Strong Portfolio, Rich Partner Base

Innovations like Apache Iceberg and Hybrid tables, Polaris, Cortex Large Language Model and ML functions are helping Snowflake win new clients. Features, including interoperability and data transformation, have been gaining traction among clients. Cortex AI is used by customers to develop data agents for both structured and unstructured data with state-of-the-art retrieval using Cortex Search and Analyst. 

SNOW benefits from a strong partner base that includes major players like Amazon, ServiceNow, Microsoft MSFT, NVIDIA, Fiserv, EY, LTMindtree, Next Pathway and S&P Global. 

In partnership with Microsoft, the company has established a Snowflake Power Platform connector for Microsoft Power Platform, enabling bidirectional access between Dataverse and Snowflake’s AI Data Cloud. The connector simplifies data interoperability between Microsoft’s service suite, Dynamics 365 and the Snowflake AI Data Cloud. Snowflake and Microsoft recently expanded their partnership to build easy, efficient, and trusted AI-powered apps and data agents with OpenAI’s models directly in Snowflake Cortex AI, Snowflake’s fully managed AI service.

Meanwhile, the acquisition of Datavolo strengthens Snowflake’s platform, offering enhanced support for structured and unstructured data while simplifying data engineering tasks. SNOW is leveraging Datavolo to introduce additional Snowflake connectors in private preview to provide seamless connectivity and data integration with key platforms like SharePoint, Google Drive, Workday, Slack, and many more. The buyout of Night Shift strengthens Snowflake’s federal footprint.

SNOW Offers Positive Guidance for Q1 and FY26

For the first quarter of fiscal 2026, Snowflake expects product revenues in the range of $955-$960 million. The projection range indicates year-over-year growth between 21-22%.

The Zacks Consensus Estimate for first-quarter fiscal 2026 revenues is currently pegged at $1 billion, indicating 21.15% year-over-year growth. The consensus mark for earnings is currently pegged at 22 cents per share, up a couple of cents over the past 30 days and suggesting an increase of 57.14% year over year.

For fiscal 2026, Snowflake expects product revenues to increase 30% over fiscal 2025 to $3.46 billion. 

The Zacks Consensus Estimate for SNOW’s fiscal 2026 revenues is pegged at $4.46 billion, indicating year-over-year growth of 23.11%. The consensus mark for earnings is pegged at $1.13 per share, up 13% over the past 30 days and suggesting an increase of 36.14% on a year-over-year basis.

SNOW has beaten the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 28.04%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

What Should Investors Do With SNOW Stock?

Snowflake benefits from a rich partner base, expanding clientele, strategically planned acquisitions and an innovative portfolio, but is weighed down by competitive pressures and rising costs. SNOW has been facing tough competition from rivals like Databricks, coupled with rising GPU-related costs, as the company is aggressively investing in AI initiatives.

Snowflake stock is currently trading below the 50-day moving average, indicating a bearish trend.

SNOW Stock Trades Below the 50-Day SMA

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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.

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This article originally published on Zacks Investment Research (zacks.com).

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