Software Stocks Hit Hard by AI Developments
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy SNOW?
Source: stocktwits
- Market Reaction: Following Anthropic's announcement of a $30 billion revenue run rate, shares of SaaS companies like ServiceNow, Snowflake, Zscaler, and Intuit plummeted on Thursday, with ServiceNow down nearly 8%, and Snowflake and Zscaler falling 12% and 11.8% respectively, indicating significant market concerns about the software sector's outlook.
- AI's Profound Impact: Ben Reitzes from Melius Research highlighted that automation poses a major threat to the software industry, predicting its effects will extend to all software companies, including the Magnificent Seven, and advised investors to steer clear of SaaS stocks due to rising risks.
- Divergent Investor Sentiment: John Belton from Gabelli Funds stated he would maintain low software exposure in his portfolios until signs of stabilizing sentiment emerge, acknowledging that while not all software companies will fail, the market's perception of SaaS has shifted dramatically.
- Hardware Beneficiaries: Reitzes suggested that the clear beneficiaries of AI advancements will likely be in hardware, particularly in the semiconductor sector, indicating that investors should focus on hardware firms rather than software companies to navigate the rapidly evolving market landscape.
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Analyst Views on SNOW
Wall Street analysts forecast SNOW stock price to rise
33 Analyst Rating
30 Buy
3 Hold
0 Sell
Strong Buy
Current: 132.240
Low
237.00
Averages
278.19
High
312.00
Current: 132.240
Low
237.00
Averages
278.19
High
312.00
About SNOW
Snowflake Inc. is a data cloud and artificial intelligence company. Its platform is the technology that powers the AI Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful insights, apply artificial intelligence (AI) to solve business problems, build data applications, and share data and data products. It provides its platform through a customer-centric, and consumption-based business model. Its cloud-native architecture consists of three independently scalable but logically integrated layers across compute, storage, and cloud services. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency. The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data to create a unified data record. Its ClearQuery platform allows users to rapidly search, explore, and analyze their data using natural language queries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Analysis of Palantir and Snowflake Earnings Reports
- Palantir Revenue Surge: Palantir reported fourth-quarter 2025 revenue of approximately $1.41 billion, reflecting a 70% year-over-year increase, with its U.S. commercial segment skyrocketing by 137%, indicating strong momentum in the AI sector, yet its price-to-earnings ratio exceeding 200 suggests market expectations may be overly optimistic.
- Snowflake's Profitability Issues: Snowflake's latest earnings report showed product revenue of $1.23 billion, up 30% year-over-year, but it still faced an annual operating loss of about $1.44 billion, primarily due to high stock-based compensation, raising concerns that market expectations for future profitability may be overly ambitious.
- Amazon Cloud Growth: Amazon's fourth-quarter net sales for 2025 rose 14% year-over-year to $213.4 billion, with its cloud segment AWS seeing a 24% revenue increase to $35.6 billion, showcasing its robust capacity for AI infrastructure investment, despite a significant drop in free cash flow to $11.2 billion.
- Market Sentiment Volatility: Despite the impressive revenue growth of Palantir and Snowflake, many software stocks have faced sharp declines amid shifting market sentiment, prompting investors to carefully assess current buying opportunities, particularly against the backdrop of high valuations in the AI sector.
See More
Software Stocks Plunge Amid AI Market Pullback
- Palantir's Strong Performance: Palantir reported Q4 2025 revenue of approximately $1.41 billion, a 70% year-over-year increase, with its U.S. commercial segment soaring 137%, yet its current P/E ratio exceeding 200 suggests overvaluation, indicating market expectations may be overly optimistic.
- Snowflake's Sluggish Growth: Snowflake's latest earnings revealed product revenue of $1.23 billion, up 30% year-over-year, but it still posted an annual operating loss of $1.44 billion, and its market capitalization of $42 billion appears to price in future profitability that remains unproven.
- Amazon's Robust Performance: Amazon's Q4 2025 net sales reached $213.4 billion, a 14% increase year-over-year, with its AWS segment revenue jumping 24% to $35.6 billion, showcasing the company's strong investment capacity in AI, despite a significant drop in free cash flow to $11.2 billion.
- Shifting Market Sentiment: Amid the widespread decline in software stocks, investors should approach current buying opportunities with caution, particularly for companies like Palantir and Snowflake, which, despite solid business performance, may face pressure from high valuations.
See More
Software Stocks Plummet, AI Giants Struggle
- Palantir's Strong Performance: Palantir reported Q4 2025 revenue of approximately $1.41 billion, a 70% year-over-year increase, with its U.S. commercial segment soaring 137%, indicating robust momentum in the AI sector; however, its price-to-earnings ratio exceeding 200 suggests that market expectations may be overly optimistic about future performance.
- Snowflake's Profitability Issues: Snowflake's latest earnings report showed product revenue of $1.23 billion, up 30% year-over-year, yet it posted an operating loss of about $1.44 billion for fiscal 2026, with heavy reliance on stock-based compensation hindering profitability, indicating that market expectations for a turnaround may be premature.
- Amazon's Cloud Growth: Amazon's Q4 2025 net sales rose 14% to $213.4 billion, with its cloud segment, AWS, seeing a 24% revenue increase to $35.6 billion, showcasing its strong capacity for AI infrastructure investment, despite a significant drop in free cash flow to $11.2 billion due to rising capital expenditures.
- Shifting Market Sentiment: Amidst a broader decline in software stocks, investor enthusiasm for AI-related equities is waning; while companies like Amazon demonstrate strong financial resilience, overall market confidence in high-valuation software stocks is diminishing, potentially leading to further price corrections.
See More
Market Remains Cautious as Oil Approaches $100 Amid Inflation Concerns
- Market Dynamics: Stock futures are essentially flat, reflecting a cautious market waiting for confirmation, with momentum from earlier in the week fading as investors remain on the sidelines regarding future trends.
- Oil Price Movement: Oil prices are creeping higher again, hovering near the $100 per barrel level, primarily due to doubts about the durability of the ceasefire and ongoing disruptions in the Strait of Hormuz, indicating persistent inflationary pressures.
- CPI Report Impact: The Consumer Price Index (CPI) report showed the sharpest year-over-year price increases for consumers in nearly four years, largely driven by the recent energy shock, and despite a pause in fighting, oil flows remain constrained and supply chains are still disrupted.
- Stock Market Performance: In pre-market trading, S&P 500 futures rose 0.14%, Nasdaq futures rose 0.21%, and Dow futures rose 0.02%, reflecting a cautiously optimistic sentiment in the market regarding future developments.
See More
Notice of Class Action Lawsuit Against Snowflake Inc.
- Class Action Timeline: Rosen Law Firm reminds investors who purchased Snowflake Inc. (NYSE: SNOW) Class A common stock between June 27, 2023, and February 28, 2024, to apply as lead plaintiffs by April 27, 2026, to protect their rights in the class action lawsuit.
- Lawsuit Background: The lawsuit alleges that Snowflake made repeated positive statements about its business during the class period while failing to disclose that product efficiency gains and pricing strategies were expected to negatively impact consumption and revenues, resulting in investor losses when the truth emerged.
- Law Firm Credentials: Rosen Law Firm specializes in securities class actions and has recovered over $438 million for investors in 2019 alone, being ranked first by ISS Securities Class Action Services in 2017, showcasing its expertise and successful track record in this field.
- How to Participate: Investors can visit the Rosen Law Firm website or call toll-free at 866-767-3653 for more information on joining the class action, with no upfront fees required, ensuring effective protection of investor rights.
See More
Snowflake Inc. Shareholder Notice Issued
- Shareholder Lawsuit Notice: The Gross Law Firm has issued a notice to shareholders of Snowflake Inc., encouraging those who purchased shares between June 27, 2023, and February 28, 2024, to contact the firm regarding potential lead plaintiff status, indicating significant legal risks for the company.
- Allegations Overview: The complaint alleges that during the class period, defendants made materially false and/or misleading statements and failed to disclose that product efficiency gains and tiered storage pricing were expected to negatively impact consumption and revenues, which could undermine investor confidence.
- Registration Deadline: Shareholders must register by April 27, 2026, to participate in the class action; failure to register in time may result in the loss of claims, highlighting the urgency of the legal process.
- Law Firm Credentials: The Gross Law Firm is a nationally recognized class action law firm committed to protecting investor rights and ensuring companies adhere to responsible business practices, demonstrating the firm's dedication to safeguarding investor interests.
See More
Analysis of Palantir and Snowflake Earnings Reports
- Palantir Revenue Surge: Palantir reported fourth-quarter 2025 revenue of approximately $1.41 billion, reflecting a 70% year-over-year increase, with its U.S. commercial segment skyrocketing by 137%, indicating strong momentum in the AI sector, yet its price-to-earnings ratio exceeding 200 suggests market expectations may be overly optimistic.
- Snowflake's Profitability Issues: Snowflake's latest earnings report showed product revenue of $1.23 billion, up 30% year-over-year, but it still faced an annual operating loss of about $1.44 billion, primarily due to high stock-based compensation, raising concerns that market expectations for future profitability may be overly ambitious.
- Amazon Cloud Growth: Amazon's fourth-quarter net sales for 2025 rose 14% year-over-year to $213.4 billion, with its cloud segment AWS seeing a 24% revenue increase to $35.6 billion, showcasing its robust capacity for AI infrastructure investment, despite a significant drop in free cash flow to $11.2 billion.
- Market Sentiment Volatility: Despite the impressive revenue growth of Palantir and Snowflake, many software stocks have faced sharp declines amid shifting market sentiment, prompting investors to carefully assess current buying opportunities, particularly against the backdrop of high valuations in the AI sector.
See More
Software Stocks Plunge Amid AI Market Pullback
- Palantir's Strong Performance: Palantir reported Q4 2025 revenue of approximately $1.41 billion, a 70% year-over-year increase, with its U.S. commercial segment soaring 137%, yet its current P/E ratio exceeding 200 suggests overvaluation, indicating market expectations may be overly optimistic.
- Snowflake's Sluggish Growth: Snowflake's latest earnings revealed product revenue of $1.23 billion, up 30% year-over-year, but it still posted an annual operating loss of $1.44 billion, and its market capitalization of $42 billion appears to price in future profitability that remains unproven.
- Amazon's Robust Performance: Amazon's Q4 2025 net sales reached $213.4 billion, a 14% increase year-over-year, with its AWS segment revenue jumping 24% to $35.6 billion, showcasing the company's strong investment capacity in AI, despite a significant drop in free cash flow to $11.2 billion.
- Shifting Market Sentiment: Amid the widespread decline in software stocks, investors should approach current buying opportunities with caution, particularly for companies like Palantir and Snowflake, which, despite solid business performance, may face pressure from high valuations.
See More
Software Stocks Plummet, AI Giants Struggle
- Palantir's Strong Performance: Palantir reported Q4 2025 revenue of approximately $1.41 billion, a 70% year-over-year increase, with its U.S. commercial segment soaring 137%, indicating robust momentum in the AI sector; however, its price-to-earnings ratio exceeding 200 suggests that market expectations may be overly optimistic about future performance.
- Snowflake's Profitability Issues: Snowflake's latest earnings report showed product revenue of $1.23 billion, up 30% year-over-year, yet it posted an operating loss of about $1.44 billion for fiscal 2026, with heavy reliance on stock-based compensation hindering profitability, indicating that market expectations for a turnaround may be premature.
- Amazon's Cloud Growth: Amazon's Q4 2025 net sales rose 14% to $213.4 billion, with its cloud segment, AWS, seeing a 24% revenue increase to $35.6 billion, showcasing its strong capacity for AI infrastructure investment, despite a significant drop in free cash flow to $11.2 billion due to rising capital expenditures.
- Shifting Market Sentiment: Amidst a broader decline in software stocks, investor enthusiasm for AI-related equities is waning; while companies like Amazon demonstrate strong financial resilience, overall market confidence in high-valuation software stocks is diminishing, potentially leading to further price corrections.
See More
Market Remains Cautious as Oil Approaches $100 Amid Inflation Concerns
- Market Dynamics: Stock futures are essentially flat, reflecting a cautious market waiting for confirmation, with momentum from earlier in the week fading as investors remain on the sidelines regarding future trends.
- Oil Price Movement: Oil prices are creeping higher again, hovering near the $100 per barrel level, primarily due to doubts about the durability of the ceasefire and ongoing disruptions in the Strait of Hormuz, indicating persistent inflationary pressures.
- CPI Report Impact: The Consumer Price Index (CPI) report showed the sharpest year-over-year price increases for consumers in nearly four years, largely driven by the recent energy shock, and despite a pause in fighting, oil flows remain constrained and supply chains are still disrupted.
- Stock Market Performance: In pre-market trading, S&P 500 futures rose 0.14%, Nasdaq futures rose 0.21%, and Dow futures rose 0.02%, reflecting a cautiously optimistic sentiment in the market regarding future developments.
See More
Notice of Class Action Lawsuit Against Snowflake Inc.
- Class Action Timeline: Rosen Law Firm reminds investors who purchased Snowflake Inc. (NYSE: SNOW) Class A common stock between June 27, 2023, and February 28, 2024, to apply as lead plaintiffs by April 27, 2026, to protect their rights in the class action lawsuit.
- Lawsuit Background: The lawsuit alleges that Snowflake made repeated positive statements about its business during the class period while failing to disclose that product efficiency gains and pricing strategies were expected to negatively impact consumption and revenues, resulting in investor losses when the truth emerged.
- Law Firm Credentials: Rosen Law Firm specializes in securities class actions and has recovered over $438 million for investors in 2019 alone, being ranked first by ISS Securities Class Action Services in 2017, showcasing its expertise and successful track record in this field.
- How to Participate: Investors can visit the Rosen Law Firm website or call toll-free at 866-767-3653 for more information on joining the class action, with no upfront fees required, ensuring effective protection of investor rights.
See More
Snowflake Inc. Shareholder Notice Issued
- Shareholder Lawsuit Notice: The Gross Law Firm has issued a notice to shareholders of Snowflake Inc., encouraging those who purchased shares between June 27, 2023, and February 28, 2024, to contact the firm regarding potential lead plaintiff status, indicating significant legal risks for the company.
- Allegations Overview: The complaint alleges that during the class period, defendants made materially false and/or misleading statements and failed to disclose that product efficiency gains and tiered storage pricing were expected to negatively impact consumption and revenues, which could undermine investor confidence.
- Registration Deadline: Shareholders must register by April 27, 2026, to participate in the class action; failure to register in time may result in the loss of claims, highlighting the urgency of the legal process.
- Law Firm Credentials: The Gross Law Firm is a nationally recognized class action law firm committed to protecting investor rights and ensuring companies adhere to responsible business practices, demonstrating the firm's dedication to safeguarding investor interests.
See More
