Snowflake Inc. (SNOW) has seen its shares decline by 35.4% year-to-date, underperforming the Zacks Computer and Technology sector, which rose by 10.6%. The company’s free cash flow margin dropped by 150 basis points in Q4 of fiscal 2026, impacted by its Observe acquisition and competition from major players like Oracle, Amazon, and Alphabet.
In Q4 fiscal 2026, Snowflake added 740 net new customers, a 40% year-over-year increase, bringing its total to over 733 customers spending more than $1 million annually, and 56 customers spending over $10 million. The company projects product revenues of $1.262-$1.267 billion for Q1 of fiscal 2027, marking an expected 27% year-over-year growth. Meanwhile, the Zacks Consensus Estimate for Q1 revenues stands at $1.32 billion, indicating a 26.85% increase compared to the previous year.
Despite a strong net revenue retention rate of 125% and an expanding portfolio, Snowflake faces significant challenges, including rising competition and a stretched valuation, which may require investors to consider a wait-and-see approach. The company carries a Zacks Rank of #3 (Hold).
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