Is There Still Room for Snowflake After 99% Stock Surge and Nvidia Partnership?

If you have been watching Snowflake’s stock lately, you know the feeling: should you jump in, hold tight, or take some gains after its nearly 99% surge over the past year? The data cloud company is a favorite talking point among both bullish tech investors and cautious analysts, and recent price moves have certainly kept everyone on their toes. Just in the past month, Snowflake’s share price has climbed another 13.6%, contributing to a striking 41.9% gain year-to-date. While three-year returns look more modest, long-term watchers will remember that this stock hasn’t always moved upward, with a five-year return still showing a slight loss. Yet, with the cloud market evolving and investor appetite for AI-powered data platforms growing, market sentiment can shift quickly. Curiously, when we score Snowflake’s valuation using six different checks, it comes away as undervalued on only 1 out of 6—so there is plenty to unpack before calling this a bargain. Let’s walk through how standard valuation approaches stack up for Snowflake, and why they may not tell the full story you need to know before making your next move.

Snowflake scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Snowflake Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model helps estimate a company's intrinsic value by projecting its future cash flows and discounting them back to today's terms. This approach aims to determine what Snowflake is truly worth based on its ability to generate cash, rather than relying solely on market sentiment or comparables.

According to the latest data, Snowflake's current Free Cash Flow stands at $726.9 Million. Analysts forecast the company's free cash flow will continue to grow, reaching roughly $3.17 Billion by 2030. It is worth noting that detailed analyst estimates are available for the next five years. Beyond that period, projections are extrapolated based on broader industry trends and company performance estimates.

Based on the 2 Stage Free Cash Flow to Equity model, Snowflake's intrinsic fair value is calculated at $176.37 per share. However, when compared to the current share price, this DCF-derived value suggests the stock is trading at a 26.7% premium. In other words, Snowflake appears overvalued by this methodology.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Snowflake.

Our Discounted Cash Flow (DCF) analysis suggests Snowflake may be overvalued by 26.7%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Snowflake Price vs Sales

The Price-to-Sales (P/S) ratio is often the preferred valuation metric for high-growth technology firms like Snowflake, especially when profits are scarce or reinvested into scaling. The P/S ratio allows investors to value the company based on its revenue generation rather than earnings, which can be volatile during rapid expansion.

While companies with faster growth or lower risk often command higher P/S ratios, a “normal” or “fair” ratio will also be influenced by factors such as profit margins, competitive landscape, and industry trends. Investors typically use benchmarks such as the sector average or the averages among close peers to gauge whether a stock looks expensive or cheap at a glance.

Currently, Snowflake trades at a P/S ratio of 18.40x. This is notably higher than the industry average of 2.57x and the peer group average of 22.94x. However, Simply Wall St's proprietary “Fair Ratio” calculation takes a more holistic approach by weighing not just growth prospects, but also profitability, company size, and risk profile. For Snowflake, the Fair Ratio sits at 14.93x, reflecting a more nuanced assessment of what a balanced valuation should be for its specifics. This makes it a more reliable check than simple peer or industry comparisons.

Since Snowflake's current P/S ratio is moderately above its Fair Ratio, the stock may be priced a bit rich on this measure, but not by an extreme margin.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Snowflake Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply a story that weaves together your perspective on a company’s future, linking what you believe about its business, the numbers you expect for revenue, profits, and margins, and ultimately what you think a fair value is today.

Instead of just relying on static ratios and external analyst targets, Narratives let you combine the information you know with your individual predictions to form a dynamic valuation. This approach anchors each buy or sell decision to both numbers and story. Available on the Simply Wall St Community page, Narratives are an easy and accessible tool used by millions of investors to share, update, and compare investment theses.

As new data such as earnings, news, or product launches emerge, Narratives update in real time, allowing you to quickly see if your fair value view has changed or if the current price now looks attractive by your own standards. For example, when looking at Snowflake, some investors may be bullish, targeting a fair value as high as $440, while others are more cautious, estimating just $170. Each Narrative reflects its creator's conviction about the business and future results.

Do you think there's more to the story for Snowflake? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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