After a 17% Surge, Is Snowflake Stock Still a Buy as Revenue Growth Accelerates?
2026-09-06 07:35
•Geoffrey Seiler •The Motley Fool
••••• • Axe Cap view
Snowflake’s Surge Tests Patience for SA Investors
Snowflake’s earnings show momentum, but lofty valuation and local absence suggest caution for JSE players.
Snowflake’s recent 17% jump after its Q2 results reflects genuine strength in AI-driven cloud data demand. Revenue growth accelerating 35% year-on-year with 32% new customers added is impressive. Yet, that 20x forward price-to-sales ratio is steep, even for a high-growth tech firm. South African investors don’t have direct access to Snowflake, so the best proxy is the USD/ZAR. Given the dollar strength and local risk factors, this tech optimism may not translate easily to the JSE or strengthen the rand much in the near term. For local tech-oriented portfolios, sticking with Naspers or Prosus—both trading at more attractive valuations—makes more sense. They have global AI ventures but are not as exposed to frothy valuations. If the rand weakens sharply on dollar rallies, tech names might suffer broader selling pressure. Snowflake’s story might be right long term, but for now, South Africans should temper enthusiasm and keep exposure limited. this is just our opinion and not financial advice
Avoid adding Snowflake directly given access issues and valuation. Instead, keep Naspers and Prosus on watch and favor quality financials like Standard Bank amid rand volatility.
- Naspers
- Prosus
- USD/ZAR
- Standard Bank
- Sudden USD strength hurting rand and local equities
- Snowflake’s valuation re-rating stalling or reversing
6/10
Snowflake stock surged 16.6% following strong fiscal Q2 earnings, with revenue climbing 35% YoY to $1.55B and product revenue accelerating for the third consecutive quarter. The company is positioned as a key platform for enterprise agentic AI deployment. However, the stock's valuation at 20x forward P/S is at the high end of its range, potentially capping near-term upside despite strong long-term growth prospects.
Our take is based on reporting first published by The Motley Fool.