**Snowflake Inc. (SNOW) has been noted as overvalued with a Value Score of F, trading at a forward Price/Sales ratio of 15.63.** This contrasts sharply with the Zacks Internet – Software industry average of 3.76. Despite this, Snowflake shares have surged by 40.2% year-to-date, significantly outperforming both the broader Zacks Computer & Technology sector (up 11.7%) and the Internet Software industry (down 11.4%).
In the first quarter of fiscal 2027, Snowflake reported a total of 13,912 customers, adding 616 net new customers, representing a 38% year-over-year increase. The company’s net revenue retention rate was 126%, and 779 customers are now spending over $1 million annually, up 29% year-over-year. For the fiscal second quarter, revenue estimates stand at $1.47 billion, indicating a projected growth of 28.39%.
However, Snowflake faces tough competition from major players like Oracle, Alphabet, and Amazon, all of which are expanding their AI capabilities. The company is dealing with margin pressures due to lower gross margins from AI products and is expecting a 150-basis-point drag on its non-GAAP adjusted free cash flow margin from its acquisition of Observe.
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