Snowflake (NYSE:SNOW), a cloud-based data platform company, has become a significant player in the tech industry. Founded in 2012, it helps businesses turn raw data into actionable insights, building a powerful Data Cloud platform used across major cloud providers like Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Google (NASDAQ:GOOG). Despite facing some setbacks in 2024, Snowflake stock has been rebounding in 2025. But with Alphabet (NASDAQ:GOOG) recently selling off its Snowflake shares, investors are left wondering: is Snowflake stock a good buy in 2025?

Snowflake’s Performance in 2024 and Early 2025

Snowflake’s market cap currently stands at $61.4 billion, yet it trades over 50% below its all-time highs. The company’s stock faced a downturn in 2024, influenced by leadership changes (CEO Frank Slootman’s retirement) and broader market conditions, including a 22% decline in its stock price. Alphabet, which had been a shareholder since 2022, sold 421,050 shares in Q3 2024 and divested the remaining 114,554 shares in Q4 2024.

Despite these challenges, Snowflake has managed to make a comeback in 2025, seeing a 19% gain year-to-date. This raises an important question for potential investors: is this rebound sustainable, and should you consider adding Snowflake stock to your portfolio in 2025?

Snowflake’s Growth Trajectory

In its fiscal third quarter of 2025, Snowflake reported impressive growth, with product revenue reaching $900 million, a 29% increase year-over-year. The company’s success can be attributed to its strategic focus on AI, machine learning (ML), and cloud infrastructure. Under CEO Sridhar Ramaswamy’s leadership, Snowflake has seen significant adoption of its AI and ML tools, with over 3,200 accounts utilizing these features.

Additionally, Snowflake has entered a partnership with Anthropic, integrating advanced AI models through Snowflake Cortex AI. This collaboration is expected to enhance Snowflake’s AI capabilities, helping enterprises develop AI applications with built-in security and governance. Snowflake’s customer base includes major players like Hyatt (NYSE:H), NBC Universal, and Toyota (NYSE:TM), who use Snowflake for everything from personalized experiences to managing content recommendations.

Financial Performance and Future Outlook

Snowflake’s financials remain robust, with a notable 68% increase in revenue over the past four quarters, totaling over $3.9 billion. The company continues to invest heavily in expanding its product offerings, including the planned acquisition of Datavolo, which will improve Snowflake’s platform for handling both structured and unstructured data. As of fiscal Q3 2025, Snowflake’s remaining performance obligations stood at $5.7 billion, reflecting strong customer demand and long-term growth potential.

For fiscal 2025, Snowflake has raised its product revenue guidance to $3.43 billion, marking a 29% year-over-year increase. Looking ahead to 2027, analysts predict Snowflake’s revenue will rise significantly, reaching $5.5 billion, with free cash flow expanding from $813 million in 2024 to $1.5 billion in 2027.

Is Snowflake Stock Overvalued?

Despite its growth potential, Snowflake commands a relatively high valuation. At 40.6x forward free cash flow (FCF), the stock is priced at a premium compared to many of its competitors. Currently, analysts remain bullish on Snowflake, with 29 out of 42 analysts recommending a “Strong Buy.” The average target price for Snowflake stock is $191.62, slightly higher than its current price.

While Snowflake’s strong growth prospects make it an appealing option for long-term investors, its premium valuation may deter those looking for more bargain-priced opportunities. Investors should weigh Snowflake’s growth trajectory against its valuation and decide whether the potential for future expansion justifies the current stock price.

Should You Buy Snowflake Stock in 2025?

In conclusion, Snowflake remains an attractive option for investors seeking exposure to cloud computing and AI growth. The company’s focus on innovation, strategic partnerships, and strong financial performance position it well for future success. However, with a high valuation and some potential market risks, investors must carefully consider whether Snowflake stock fits their investment strategy. If you’re willing to pay a premium for growth, Snowflake may still be a good buy, especially as it expands into new AI and data-driven markets.

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