Shares of Snowflake Inc. (SNOW) surged more than 20% following the company’s impressive third-quarter earnings report, with both revenue and earnings beating Wall Street expectations. In addition to strong financials, Snowflake also announced a key acquisition and a promising AI partnership, further boosting investor optimism.

Snowflake’s Strong Earnings and Forecast Lift

The cloud data company reported a 28% increase in revenue, reaching $942 million, surpassing analysts’ expectations of $897 million. Despite the positive earnings, Snowflake’s net loss widened to $324.3 million, up from $214.3 million a year ago. However, adjusted for one-time costs like stock-based compensation and restructuring expenses, Snowflake posted adjusted earnings of $73.31 million, better than expected.

For fiscal year 2025, Snowflake raised its product revenue forecast to $3.43 billion, up from the previous estimate of $3.36 billion, signaling continued growth. Snowflake also reported an increase in paying customers, with 10,618 customers as of October 31, up by 369 from the previous quarter.

Strategic Moves Boosting Investor Confidence

Snowflake’s strong performance is complemented by strategic initiatives. The company announced its acquisition of Datavolo Inc., a data integration startup that will help enhance Snowflake’s data pipeline offerings. Additionally, Snowflake secured a multi-year partnership with AI firm Anthropic, which will bring Claude, an AI model, to Snowflake products, strengthening its foothold in the growing AI market.

CEO Sridhar Ramaswamy emphasized the company’s focus on improving profitability, mentioning the reorganization of internal teams and streamlined decision-making processes.

SNOW Has Excellent Timing, Fair Safety, and Poor Upside Potential

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These ratings are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, allowing for quick and easy interpretation.

It gets even better, though. You’re given a buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. Here’s what we found for SNOW:

  • Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. It’s a far superior indicator than the typical comparison of price to value alone. SNOW has a poor RV rating of 0.58, indicating limited long-term growth potential. Despite the company’s earnings growth, the stock is currently overvalued with a current value of just $15.98 per share.
  • Fair Safety: The RS rating is a risk indicator that’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. SNOW has a fair RS rating of 0.85, signaling some stability but with considerable risk due to its competitive sector and the volatility it’s facing.
  • Excellent Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. SNOW has an excellent RT rating of 1.75, reflecting the stock's strong short-term momentum as it surged following positive earnings.

The overall VST rating of 1.23 is good for SNOW, and the stock is currently rated a BUY according to VectorVest. While the stock has excellent short-term momentum, its poor upside potential and valuation should be a concern for long-term investors.

Snowflake’s Shares Surge After Blowout Earnings and New Partnerships: Is It Time to Buy?

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VectorVest advocates buying safe, undervalued stocks, rising in price. For now, SNOW has excellent short-term momentum, but its weak long-term outlook and overvaluation make it a risky investment for those seeking stability and strong growth.

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