In today's rocky economic environment, many investors are curious about where Warren Buffett is putting his money. The Oracle of Omaha is a famed value investor who typically seeks out businesses with wide economic moats, high dividend yields, and robust cash-flow generation, many of which don't fall under the umbrella of the fast-growing technology sector.

The star stock picker hasn't completely shied away from high-growth tech names, however. Currently, he has roughly $1.4 billion tied up in the software company Snowflake (SNOW 0.71%). Snowflake, which provides a single platform for data storage, processing, and analytic solutions, has plunged 53% year to date amid the ongoing tech sell-off linked to high inflation and rising borrowing costs.

As a result of the software company's fresh pullback, should investors follow Buffett's lead, and buy the stock today?

Close-up of person on laptop with tech-centric background.

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What's happening with Snowflake's business?

Snowflake doesn't operate a software-as-a-service (SaaS) business model -- 93% of its sales are consumption-based, meaning revenue is recognized only as consumption occurs. Unwavering inflation and the Federal Reserve's interest rate hikes have not been easy on tech companies of late, but Snowflake has continued to expand at a blistering pace. To kick off its fiscal-year 2023, the company reported an 85% surge year over year in total revenues in the first quarter, up to $422.4 million, coupled with a net loss of $0.53 per share.  

The software enterprise also made strong headway on expanding its clientele, with total customers increasing 39.6%, up to 6,322, and the number of customers providing $1 million or more in product revenue soaring 98% to finish at 206. In my opinion, growing revenue is fantastic, but what's more important is a company's ability to retain customers.

Snowflake is great at doing just that -- its dollar-based net revenue retention (NRR) rate is currently 174%, whereas anything above 100% is usually considered good for a business. Snowflake is easily exceeding that, a telling signal for investors. Net revenue retention rate is the percentage of recurring revenue that's retained from existing customers over a specific time period. 

For the full fiscal year, Wall Street analysts forecast Snowflake's total revenues to ascend 66.1% year over year to $2 billion, and its adjusted earnings per share to conclude at $0.18, a major uptick from its $0.01 per share a year ago. Next year, analysts are projecting top- and bottom-line growth of 52.7% and 122%, respectively. Today, the stock pegs a price-to-sales multiple of 33.2. That's surely not a cheap price; however, it does represent the company's lowest valuation since going public in September 2020. It'll be interesting to see if Snowflake can grow into its towering valuation of today. 

Should investors follow in Buffett's footsteps?

I believe Snowflake provides investors with a favorable margin of safety at this time. Although the company faces stiff competition from well-funded tech giants like Amazon, Microsoft, and Alphabet, it's well positioned at the moment with an 18.9% share of the data warehousing market. Likewise, the software firm has persistently demonstrated its ability to expand at a rapid clip, implying that it should greatly benefit from the cloud computing industry's expected compound annual growth rate (CAGR) of 17.4% through 2030. For investors with a lengthy time horizon and a little bit of risk tolerance, Snowflake makes for a compelling buy today.