Snowflake (SNOW 1.14%) just posted another strong quarter. Product revenue climbed 30% year over year to $1.23 billion in its fiscal fourth quarter (ended Jan. 31, 2026), and remaining performance obligations (RPO) impressively rose 42% to $9.77 billion.
But I'm still not buying the stock here.
Yes, Snowflake's top-line growth is impressive. But there are two problems: Snowflake's substantial net losses and valuation. Given the stock's high price tag today, the bull case still relies on a future profitability inflection that just isn't materializing.
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Snowflake is executing, and guidance is solid
Snowflake's fiscal fourth quarter definitely featured some factors that bolstered the bull case for the growth stock. The AI data cloud company's net revenue retention was 125% -- and management said Snowflake ended the year with 733 customers generating more than $1 million in trailing-12-month product revenue -- up 27% year over year. It also added 740 net new customers in the quarter -- up 40% year over year.
Additionally, the company's results highlight an acceleration in product revenue growth. Snowflake's year-over-year product revenue growth rate of 30% in fiscal Q4 was up from 29% growth in fiscal Q3. And its acceleration in RPO growth of 42% was even more pronounced; the company's fiscal Q3 RPO increased 37% year over year.
This inflection in the company's growth profile reflects Snowflake's positioning as an AI beneficiary, Snowflake CEO Sridhar Ramaswamy explained in the company's fiscal fourth-quarter earnings release.
"This past year has been transformative for every business, as the promise of AI became real, and Snowflake sits at the center of the enterprise AI revolution," Ramaswamy said.
He continued:
For over a decade, we've built the foundation that makes AI safe and scalable -- a single source of truth, cross-cloud interoperability, and enterprise-grade governance. Now, we're activating world-class agentic capabilities on top of that platform.
And management expects more strong growth going forward. Snowflake guided fiscal 2027 product revenue to $5.66 billion, implying 27% year-over-year growth. And for the first quarter of fiscal 2027, specifically, it guided for product revenue of $1.262 billion to $1.267 billion, also implying 27% growth.
NYSE: SNOW
Key Data Points
Where are the profits?
The problem? Snowflake is still not profitable on a GAAP basis, and the losses are not small.
In fiscal Q4, the company reported a GAAP operating loss of $318 million. For the full fiscal year, it reported a GAAP net loss attributable to Snowflake of about $1.33 billion -- significant for a company with full-year revenue of just $4.7 billion.
This gap between a strong top-line story and a still-negative GAAP bottom line is the main reason I'm remaining cautious. I might reconsider this view if the stock were trading at a much cheaper valuation. But Snowflake currently commands a market capitalization of about $57 billion, giving the stock a price-to-sales ratio of about 12. A valuation like this implies that Snowflake will not only reach profitability soon but also deliver substantial profits at some point. Yet Snowflake's fiscal 2026 net loss of $1.33 billion was actually worse than its fiscal 2025 net loss of $1.29 billion.
Ultimately, Snowflake is a great business. And it arguably needs to invest aggressively to succeed in the intensely competitive data cloud space it operates in -- so you can't fault management for doing so. Further, its latest quarter supports the idea that the platform is becoming more central as companies modernize data stacks and deploy AI tools. And its demand signals -- from accelerating product revenue growth to RPO -- are impressive.
Still, I'm not buying Snowflake stock here. Given its persistent losses in an intensely competitive space and its steep valuation, I just think there are better investments to consider. With Snowflake stock, I'll remain on the sidelines for now.
