Buffett Brain · Research note
Score updated 21 Oct 2026 · analysis from 1 May 2026
SNOW· Technology
Snowflake
Snowflake's high gross margins don't compensate for negative earnings and valuation metrics that defy Buffett's principles.
Buffett fit
Weak fit
Owner
30
Durability
8
Management
0
Price
0
Score updated 21 Oct 2026 · analysis from 1 May 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of Snowflake would mean grappling with its current inability to generate profits, as seen in the negative net margin of -30.76% and of -25.24%.
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The biggest threat to Snowflake's durability is the competitive and rapidly evolving tech landscape, which could erode its switching costs advantage.
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Snowflake's is concerning, with a share count CAGR of -6.93% indicating dilution.
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At the current price of $207.20, Snowflake's valuation is difficult to justify with an EV/Sales of 16.67 and a negative yield of -2.13%.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 167.07% indicates potential for profitability if operating costs are managed.
- 2Debt/Equity ratio of 0.00 suggests no reliance on debt financing.
- 3Net debt/EBITDA of -0.05 indicates a strong balance sheet position.
- 4Current ratio of 1.32 shows short-term obligations are covered.
Concerns
8- 1 of -34.28% shows significant operational inefficiencies.
- 2Net margin of -30.76% highlights ongoing losses.
- 3 of -25.24% suggests poor returns on invested capital.
- 4Negative earnings yield of -1.9% indicates no current profit generation.
Price history
$320-5.9%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Snowflake operates as a cloud-based data warehousing company, generating $3.63 billion in revenue with a of 67.07%. Despite the high gross margin, the is -34.28%, indicating significant losses. The company focuses on subscription-based services, which should ideally provide stable cash flows, but the negative net margin of -30.76% suggests otherwise. Unit economics are weak due to high operational costs relative to revenue.
What other investors would say
The same company, judged by three other documented playbooks.
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