Earnings Report Preview | After a rebound of over 40% before earnings, can the AI dividend support Snowflake's 155 times price-to-earnings ratio?

According to Zhitong Finance APP, Snowflake (SNOW.US) will announce its first-quarter financial report after the U.S. stock market closes on May 21 (morning of May 22 Beijing time). Wall Street analysts predict that Snowflake's earnings per share will be $0.22, a 57.1% increase year-over-year, with revenue expected to be $1 billion, a 21.1% year-over-year growth.

Over the past month, Snowflake's stock price has continued to rebound from the low point after the "liberation day" of tariffs, with an increase of over 40%. This cloud computing data platform company has indeed benefited from the easing of global trade tensions, welcoming a recovery alongside many technology companies.

With the quarterly report disclosure imminent, Wall Street is holding its breath. Most analysts maintain a "buy" rating and optimistic target prices, expecting the company to continue its strong growth trend. Last quarter, Snowflake's revenue and earnings exceeded expectations.

Mizuho analyst Gregg Moskowitz raised Snowflake's target price on the eve of the earnings report and listed this data storage company as "the top stock to hold for the April fiscal quarter."

Moskowitz maintains an "outperform" rating on the stock and raised the target price from $190 to $205. He noted that the entire software industry is showing strong development momentum, and Snowflake's stock still has upside potential. This analyst also recommends holding Okta (OKTA.US) and Salesforce (CRM.US), which will release their earnings reports on May 27 and 28, respectively.

Moskowitz wrote that despite the frequent tariff-related news over the past month, the software sector has performed robustly, adding that "AI applications, including intelligent agents, are accelerating in popularity." In February of this year, Snowflake announced an expansion of its partnership with Microsoft (MSFT.US) to directly integrate OpenAI models into the Snowflake Cortex AI service platform; at the same time, Microsoft enterprise users will be able to call Cortex "data agents" in Microsoft 365 Copilot and Teams.

However, top investors at the U.S. private equity firm Noah's Arc Capital Management have sounded the alarm.

"Despite the double-digit growth and AI opportunities, Snowflake's business execution and competitive pressure may struggle to support the current valuation," asserted this five-star investor. He particularly emphasized that the company's growth rate has deviated from the early years of "super high growth," with net revenue retention rates continuing to decline.

In Noah's Arc's view, the market's expectations for Snowflake's sustained high growth and margin expansion are overly optimistic. The current forward price-to-earnings ratio of 155 is based on the assumption of "perfect execution," while the actual business fundamentals may not match.

Even more concerning is that last year's $1.48 billion in equity incentives accounted for a staggering 41% of revenue, severely diluting shareholder equity.

This investor further pointed out that the decline in net revenue retention rates exposes potential risks in the business model: the attractiveness of the usage-based revenue system is waning, and future contract renewal scales may shrink In addition, cloud giants such as Microsoft, Amazon (AMZN.US) AWS, and Google (GOOGL.US) are eating into its data platform market share. "The increasingly fierce competition will lead to Snowflake's defeat in key business battles," Noah's Arc ultimately gives a "strong sell" rating.

Overall, the mainstream view on Wall Street remains relatively optimistic. A consensus of "strong buy" is formed by 32 "buy" ratings and 6 "hold" ratings, with a 12-month target price of $203.69 indicating double-digit upside potential