Is SNOW a good stock to buy? We came across a bullish thesis on Snowflake Inc. on Phaetrix Investing’s Substack by Phaetrix. In this article, we will summarize the bulls’ thesis on SNOW. Snowflake Inc.’s share was trading at $150.44 as of April 20th. SNOW’s forward P/E was 80.65 according to Yahoo Finance.
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Snowflake Inc. (SNOW) remains a leading player in the consumption-based cloud data platform market, offering a highly scalable solution that charges customers based on usage rather than seats. The company continues to demonstrate strong demand signals, with product revenue reaching $1.158 billion in the latest quarter, up 29% year-over-year, and remaining performance obligations (RPO) growing 37% to $7.88 billion.
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Net revenue retention remains robust at 125%, reflecting solid customer engagement and expansion within its enterprise footprint. Snowflake’s platform is deeply embedded in enterprise data workflows, and its large-account base continues to expand, underscoring the relevance and stickiness of its offering.
While stock-based compensation remains elevated at roughly 34% of revenue, this reflects an investment in talent to drive long-term growth and operational leverage. Free cash flow, though currently impacted by shareholder-heavy math, is expected to improve, with FY26 guidance targeting a 25% adjusted free cash flow margin. Snowflake is navigating customer optimization trends prudently, and the market is beginning to price in the potential for durable margin expansion as these transient headwinds normalize.
At a market capitalization of around $71.5 billion and trading near $209, Snowflake’s valuation implies roughly 15.6× EV to forward product revenue, reflecting premium positioning in a high-growth market. For investors focused on real operating leverage, Snowflake offers a compelling risk/reward opportunity, with multiple catalysts including continued RPO growth, stable retention, and improving free cash flow quality. With demand trends intact and the platform central to enterprise data workloads, Snowflake is well-positioned for meaningful upside, making it an attractive entry point for disciplined, growth-oriented investors.
Previously, we covered a bullish thesis on Snowflake Inc. (SNOW) by Compounding Your Wealth in May 2025, which highlighted 26% product revenue growth, expanding RPO to $6.7 billion, improving margins, and AI integration across enterprise workflows. SNOW’s stock price has depreciated by approximately 25.95% since our coverage due to heavy stock-based compensation, which totaled about $412M in the quarter (~34% of revenue), highlighting the dilution embedded in non-GAAP margins. Phaetrix shares a similar view but emphasizes 29% revenue growth, RPO of $7.88 billion, and improving free cash flow.
Snowflake Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 90 hedge fund portfolios held SNOW at the end of the fourth quarter which was 102 in the previous quarter. While we acknowledge the risk and potential of SNOW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNOW and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
