Key Takeaways
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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.
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Snowflake rents its computing power, so those AI capex bills aren't its own.
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The selloff cut its forward P/E to 121x by Friday, below its three-year average of 165x.
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Dec. 2 is the test: the full-year guide implies about $1.65 billion of January-quarter product revenue.
Snowflake ( SNOW:NYSE )stock is down 13% in the past week, and the bad news all came from somebody else.
Amazon ( AMZN:NASDAQ )and Oracle ( ORCL:NYSE )revived worries about who pays for AI, ServiceNow ( NOW:NYSE )dragged software down, and Datadog ( DDOG:NASDAQ )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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