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The broader market selloff has compressed SNOW from $277 in Nov 2025 to \~$153 in four months. That's a lot of fear priced in. I’ve been building conviction on Snowflake for the past few months. I think it is finally getting interesting for a staged entry. You're buying a high quality compounder at a valuation that, while not cheap, is the most reasonable it's been since 2022.
I'm planning to start with a small position and plan to scale in through 2026 as execution confirms.
Here’s my thesis.
Snowflake just closed FY2026 with $4.72B in product revenue, up 30% YoY. Q4 product revenue hit $1.23B (+30%), and the company guided FY2027 at \~$5.66B (\~27% growth). That's deceleration from the triple-digit days, but 27-30% growth at this scale puts SNOW in rare company among enterprise software names. What also caught my attention are the leading indicators underneath it.
**1. AI consumption is inflecting.**
Over 9100 accounts are now using Snowflake AI features — the largest sequential increase the company has ever reported. Snowflake Intelligence scaled to 2500+ accounts in just 3 months. Cortex Code is already active across 4400+ customer accounts. Customers are driving incremental platform consumption on top of existing analytics and data engineering workloads. AI workloads are becoming a second growth engine.
**2. RPO acceleration signaling revenue durabiliTty.**
Remaining performance obligations hit $9.77B, up 42% YoY and that growth rate *accelerated* for the second consecutive quarter. RPO is the closest thing to a forward-looking revenue guarantee in a consumption model. When RPO is growing faster than revenue, it means the backlog is building, not depleting. For a company the market is pricing like growth is dying, that is a disconnect.
**3. The platform is becoming stickier.**
The product surface now spans analytics, data engineering, AI/ML, and now observability (Observe acquisition). Each new workload a customer adopts raises switching costs. Net revenue retention at 125% confirms existing customers keep spending more. 733 customers now spend $1M+ annually (+27% YoY), and Snowflake serves 790 of the Forbes Global 2000. This is becoming enterprise infrastructure.
However, there are two keys risks pulling me from starting a position.
**1. Valuation.**
Even after a 45% drawdown (\~$153), SNOW trades at \~12x forward revenue and a forward P/E near 200. The stock is priced for sustained high growth and margin expansion. If revenue growth decelerates below 25%, the multiple has room to compress further. GAAP losses widened to -$1.33B in FY2026, and stock-based compensation remains elevated at \~37% of revenue. I think the valuation carries real risk.
**2. Databricks and hyperscalers Competition.**
Databricks is growing faster in ML-heavy workloads and has stronger momentum with data engineering teams. AWS (SageMaker Lakehouse), Google (BigQuery + Gemini), and Azure (Azure OpenAI) are all converging toward integrated data + AI stacks that work natively with existing cloud workloads. Snowflake multi-cloud neutrality is a differentiator, but hyperscalers control the underlying infrastructure and increasingly offer competitive alternatives. If enterprises consolidate onto single-cloud stacks, Snowflake's advantage weakens.
Curious what others think, anyone else building a position here? or waiting for further weakness lower than $50B valuation?