Is It Time to Buy, Sell, or Hold Snowflake Stock After Q3 Earnings?
Stock Performance: Snowflake (SNOW) shares have declined by 11.4% since its third-quarter fiscal 2026 results due to a hyperscaler outage, but have increased by 27.9% over the past year, outperforming the broader tech sector.
Growth Drivers: The company's growth is fueled by a strong portfolio, expanding partner base, and significant adoption of its AI capabilities, with a net revenue retention rate of 125% and over 7,300 customers using its AI and ML technology weekly.
Future Projections: For the fourth quarter of fiscal 2026, Snowflake anticipates product revenues between $1.195 billion and $1.2 billion, reflecting a year-over-year growth of 27%, while full fiscal 2026 revenues are expected to reach $4.446 billion, indicating 28% growth.
Valuation Concerns: Despite its robust growth, Snowflake's stock is considered overvalued with a forward Price/Sales ratio of 14.55X, and the company faces challenges from macroeconomic uncertainties and competition, leading to a Zacks Rank of #3 (Hold).
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- Stock Decline: Amazon's stock has dropped 14% year-to-date and has faced a nine-day losing streak, the longest since July 2006, although Wall Street believes the stock is undervalued with a median target price of $285, indicating a potential 43% upside.
- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
- AWS Growth Acceleration: Amazon's cloud computing platform, AWS, grew at a pace of 24% in Q4, marking the fastest growth in 13 quarters, highlighting its critical role in AI model development and enhancing Amazon's competitive position in the market.
- Valuation Pullback Justified: Despite significant revenue and earnings growth, Amazon's stock has declined by approximately 7% since 2025, with its PE ratio dropping to 26.5 times, reflecting a market reassessment of its valuation, potentially providing a reasonable buying opportunity for investors.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2026, primarily for data center construction, which may impact cash flows; however, if AI computing demand continues to grow, this investment will support future business expansion.
- Investor Confidence Recovery: Although the Motley Fool analyst team did not include Amazon in their current best stock picks, analysts believe that Amazon is poised for a stock rebound in 2026, indicating a recovery in market confidence regarding its future performance.
- Surging Power Demand: Schmidt warns that the U.S. needs an additional 92 gigawatts of power to sustain AI growth, while Musk shares a video highlighting that an average nuclear plant generates about 1.5 gigawatts, underscoring the urgency of power supply.
- Space Data Center Concept: Google's initiative aims to harness uninterrupted solar power in space to alleviate cooling constraints, with Pichai describing it as a 'moonshot' akin to Waymo's ambitions, indicating high aspirations for technological advancement.
- Reliance on Technological Breakthroughs: Pichai notes that the feasibility of this initiative hinges on significant breakthroughs in launch technology by Musk's SpaceX, showcasing the potential for developing space-based infrastructure.
- Divergent Market Reactions: While Alphabet Class A shares have surged 50.23% over the past six months, Amazon's stock has declined by 14.13%, reflecting differing market perceptions regarding the economic viability of space data centers.
- Attractive Valuation: Amazon's stock is currently trading at about 26.5 times the 2026 forward P/E ratio, significantly lower than valuations of traditional retailers like Walmart and Costco, indicating a historically cheap valuation that may present a strong buying opportunity for investors.
- Operational Efficiency Gains: With over 1 million robots deployed in its distribution centers, coordinated by the DeepFleet AI model, Amazon has significantly improved delivery speed and operational efficiency, which is driving robust growth in its e-commerce business.
- Advertising Revenue Growth: Amazon's high-margin sponsored ad business saw a 22% revenue increase last quarter, becoming a key driver of its operating income growth and showcasing its strong competitive position in the digital advertising space.
- Cloud Computing Market Leadership: Holding the number one market share in cloud computing, Amazon's revenue growth accelerated to 24% in Q4, the highest in over three years, indicating that the company will continue to invest aggressively in response to booming demand for AI infrastructure, with capital expenditures projected to reach $200 billion by 2026.
- Massive Sell-off: Coinbase CEO Brian Armstrong sold over $545.7 million in stock over nine months, executing 88 sell orders with no purchases, indicating significant concerns about market conditions and investor sentiment.
- Net Worth Decline: Armstrong's net worth plummeted by over $10 billion from a peak of $17.7 billion in July 2025, now standing at $7.5 billion, primarily tied to his 14% stake in Coinbase, reflecting a broader decline in confidence in the cryptocurrency market.
- Analyst Rating Divergence: Goldman Sachs upgraded Coinbase to a 'Buy' with a $303 price target on January 5, citing growth in non-trading revenue as a buffer against market cycles, while JPMorgan cut its target by 27% on Tuesday, highlighting declining trading volumes and softness in crypto prices.
- Price Trend Analysis: Coinbase shares closed down 6% yesterday after breaking critical support at $230-$240, currently testing the $150-$155 zone, and if it fails to reclaim $168-$170, it could face increased technical pressure moving forward.
- Attractive Valuation: Amazon's stock is currently trading at about 26.5 times the 2026 expected P/E ratio, significantly lower than valuations of traditional retailers like Walmart and Costco, making it one of the cheapest investment opportunities in its history and attracting investor interest.
- Operational Efficiency Gains: With over 1 million robots deployed in its distribution centers and coordinated by the DeepFleet AI model, Amazon has not only increased delivery speed but also significantly enhanced operational efficiency, driving sales growth.
- Advertising Revenue Surge: Amazon's high-margin sponsored ad business saw a 22% revenue increase last quarter, becoming a key driver of its operating income growth and further solidifying its leading position in the global digital advertising space.
- Cloud Computing Market Leadership: Holding the number one market share in cloud computing, Amazon's revenue growth reached 24% in Q4, the highest in over three years, indicating its commitment to invest $200 billion in capital expenditures to meet the booming demand for AI infrastructure.









