Snowflake (SNOW): Assessing Valuation After a 14% Pullback and Strong Year-to-Date Rally

Snowflake (SNOW) has been drifting lower over the past month, down roughly 14%, even as its year to date gain sits near 37%. That gap is exactly what has investors debating the stock’s next move.

See our latest analysis for Snowflake.

That recent 30 day share price return of roughly negative 14 percent looks more like a pause than a breakdown, given Snowflake’s still strong year to date share price gain and solid multi year total shareholder returns that signal that longer term momentum is intact.

If Snowflake’s pullback has you thinking about what else the market is pricing for growth, it is worth exploring high growth tech and AI stocks as a way to spot the next wave of potential leaders.

With shares still up strongly this year, a lofty revenue multiple, and analysts seeing upside from here, the real question is whether Snowflake is quietly undervalued or if the market has already priced in its next leg of growth.

Most Popular Narrative: 23.2% Undervalued

With Snowflake last closing at $216.29 against a fair value estimate near $281.73, the most followed narrative is leaning firmly toward upside potential.

Improving operational rigor, growing gross margins (76.4% gross margin this quarter), and recent investments in sales capacity suggest potential for further operating leverage and net margin expansion as new product lines and regions (such as EMEA) reach scale, enhancing future earnings power.

Read the complete narrative.

Curious how a still unprofitable business earns such a rich future profit multiple? The narrative leans on bold revenue ramps, margin shifts, and a punchy valuation bridge that might surprise you when you see the full math.

Result: Fair Value of $281.73 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this upside case hinges on sustained AI driven demand and smooth cloud migrations, while intensifying hyperscaler competition could quickly pressure growth and margins.

Find out about the key risks to this Snowflake narrative.

Another View: Cash Flows Tell a Tougher Story

While the narrative driven fair value points to upside, our DCF model is more cautious, with Snowflake trading above an intrinsic value estimate near $153. That gap suggests the market may be paying up early for future AI growth that still needs to be proven out.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Snowflake for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 907 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Snowflake Narrative

If you see the story differently or want to pressure test the assumptions yourself, you can build a personalized Snowflake thesis in minutes: Do it your way.

A great starting point for your Snowflake research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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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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