Key Takeaways
- Snowflake stock fell 13% in the week to Nov. 2 with no bad news of its own, as Amazon’s and Oracle’s AI spending and a ServiceNow miss hit software stocks, Datadog included.
- Snowflake rents its computing power, so those AI capex bills aren’t its own.
- The selloff cut its forward P/E to 121x by Friday, below its three-year average of 165x.
- Dec. 2 is the test: the full-year guide implies about $1.65 billion of January-quarter product revenue.
Snowflake (SNOW) stock is down 13% in the past week, and the bad news all came from somebody else.
Amazon (AMZN) and Oracle (ORCL) revived worries about who pays for AI, ServiceNow (NOW) dragged software down, and Datadog (DDOG) fell even harder before its Nov. 4 report.
Other people’s AI bills
After the close on Oct. 29, Amazon said its trailing 12-month free cash flow had swung to a $42.4 billion outflow, mainly because AI pushed its net capital spending up $94.8 billion over that period. Before Monday’s open, Oracle filed to raise $20 billion in stock and bonds for its buildout, and its shares closed down 8.8%.
Snowflake rents that capacity rather than building it. This year it signed a five-year, $6 billion purchase commitment with AWS, and on Oct. 27 Oracle said Snowflake will run as a native service on Oracle’s cloud too.
ServiceNow, down 33%, missed on adjusted EPS on Oct. 28 and forecast slower growth in contracted revenue. Snowflake’s own contracted backlog also slipped, from $9.77 billion in January to $9.00 billion in July, though that was still 30% above a year earlier.
Datadog dropped 23%, yet analysts’ earnings estimates held steady through October.
Snowflake’s growth keeps speeding up
Snowflake spent just 2.2% of revenue on capex in the year ended January 2026. The AI bill reaches it through gross margin instead: management now expects an adjusted product gross margin of 74% this year, down from 75%.
Product revenue rose 37% to $1.49 billion in the July quarter, the third quarter in a row that growth picked up. Analysts see revenue rising from $4.68 billion in the year ended January 2026 to $8.13 billion two years later:
Nothing this week gives them a reason to cut those numbers.
TIKR tracks 52 analysts on Snowflake. How many say “Buy”?
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A low bar on Dec. 2
Snowflake reports after the close on Dec. 2. The full-year guide implies about $1.65 billion of January-quarter product revenue, a bar that already looked low after two quarters of beating the top of its guide by more than 5%.
What changed this week is the price. The stock traded at 121x forward earnings on Friday, down from about 134x on Oct. 27 and below its three-year average of 165x. Monday’s 5% drop took it lower still. The consensus price target has climbed from $229 in late May to $427:
That’s 47% above Monday’s close of $290.68.
The risks are a $263 million GAAP operating loss in the July quarter and $3.75 billion of 0% convertible notes that could dilute shareholders.
On balance, the selloff looks like a chance to buy: growth is speeding up, and the stock is cheaper than usual. If December’s guide comes in light, though, remember December 2025, when Snowflake beat revenue estimates and still fell 11.6% on a weak outlook.
So what is Snowflake stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
