GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Snowflake looks expensive against its sales at $316.77. It trades at 21x sales and 14x next year's, while software companies usually get 8x. Fair value runs $165.06 to $210.08, about 8x next year's sales, so buyers pay 51% above fair, and the forward view already assumes 39% more sales than trailing. This is a valuation read only, based on reported earnings and estimates. x.comÂ
AI agents threaten Snowflake's land-and-expand model, because when an agent does the work a seat used to do, net retention runs in reverse. At 17x sales and 94x forward earnings, the stock prices 34% growth as scarce and permanent, while a 67% gross margin still leads to a negative 22% operating margin. Its query layer is exactly what hyperscalers bundle for free, so it is not a buy at these levels. x.comÂ
Snowflake's valuation is even more detached now than in 2021: estimates are lower, the risk-free rate is higher, and the stock price is the same. Even with 33% growth implying $11-12B of revenue a year out, a $130B value against about $200M of profit makes little sense; $20B of profit far in the future is worth about $2B today. With the 10-year at 4.8%, earnings ten years out are worth only 62% of their value under zero rates. Per 2021 forecasts it should have had over $20B in revenue this year. … Show more
Snowflake now looks really expensive against a $180-200 valuation, even though the business remains strong. It is growing around 30% and pushing hard into AI with its cloud data solutions, which could drive strong growth for years. x.comÂ
Snowflake's revenue growth has far outpaced its stock return, leaving a valuation disconnect. Revenue rose 363% over five years to $1.55 billion quarterly while the shares gained just 19%; that disparity looks hard to justify. x.comÂ
Snowflake's upside is limited even in a dream scenario. If it grows 35% a year for seven years and EBITDA margins expand from 16% to 43%, ignoring stock compensation, it reaches $43 billion of revenue and $18.5 billion of EBITDA. Once growth slows to about 10%, that is roughly where Salesforce is today, so all that winning yields only about 2x the current enterprise value. x.comÂ
Snowflake's valuation looks full after more than doubling since May on an AI inflection story, given five years of promised inflections that didn't materialize. Stock-based compensation remains heavy at $1.6B against FY2026 revenue of $4.7B, though dilution has been kept in check lately. At about 23x EV/revenue, or 19x forward, it sits near the top of its 2-3 year range. A Databricks IPO could make investors see Snowflake as old relic tech. x.com x.comÂ
Snowflake is showing real AI-driven sales acceleration, and analysts questioning its buybacks and 2028 earnings guide misread it. Net revenue retention is 126%, @WisemanCap notes AI workloads carry higher gross margins than traditional ones, and management sees a $460B TAM by 2031. SBC fell from 50% of revenue to 29% last quarter and could be about 20% in a year; at under $90B EV it trades at 9-10x next year's revenue. Not cheap, but top line and margins drive free cash flow. x.com x.com x.com … Show more
Snowflake looks overhyped, with Wall Street analysts projecting only a 16.86% return over the next 12 months. x.comÂ
Combining estimated NTM revenue growth with trailing GAAP EBITDA margin makes Palo Alto Networks, Datadog, JFrog, Rubrik and Snowflake look overvalued against forward EV/sales. Zoom, Alphabet, Oracle, AppLovin, Microsoft, Fair Isaac, Adobe, Amazon and Teradata remain undervalued on this Rule of 40 comparison; Palantir, Cloudflare and CrowdStrike remain overvalued. x.comÂ
Snowflake remains headed to $390 a share by end-2027 because investors have yet to fully realize it benefits from AI rather than being disrupted by it. It guides for 31% growth and roughly $1.5B of free cash flow, moving toward $2B a year. Buying before the market latches onto that narrative captures the easy money, while waiting for market clues means trailing the market. x.comÂ
Snowflake is still not GAAP profitable at a $125 billion valuation because it keeps chasing top-line growth at any cost. x.comÂ
