Michael Burry Calls Snowflake Stock Overvalued After a Big Post-Earnings Rally

Snowflake’s (SNOW) latest earnings report gave investors plenty to celebrate. The cloud-data platform topped expectations, delivered product revenue growth of 37% year-over-year (YOY) to $1.49 billion, and raised its fiscal 2027 product revenue outlook to $6.07 billion. CEO Sridhar Ramaswamy said that artificial intelligence (AI) offerings accounted for roughly half of the company’s latest growth acceleration. In the wake of the second-quarter fiscal 2027 results, shares of SNOW stock surged close to 17% on Sept. 3.

But not everyone is convinced the enthusiasm is justified. Famous investor Michael Burry has called Snowflake “very overvalued.” His warning comes as Snowflake’s stronger outlook raises expectations for its AI growth, customer spending, and future profitability.

Has Snowflake’s earnings report confirmed its place among enterprise AI’s most important winners? Or has the post-earnings rally pushed SNOW stock’s valuation beyond what even its impressive growth can support? Let’s take a closer look.

Snowflake’s Premium Numbers

Worth $116 billion by market capitalization and headquartered in Menlo Park, California, Snowflake runs a platform that organizations use to store, share, govern, and analyze information across public-cloud environments. Its services support data engineering, analytics, applications, and AI development. 

SNOW stock closed at $335.50 per share on Sept. 8. Currently, shares are up 53% year-to-date (YTD) and 49% over the past 52 weeks.  

At 24.9 times sales and 60 times book value, Snowflake stock trades well above the respective sector medians, leaving little room for a meaningful slowdown.

Snowflake’s Q2 fiscal 2027 report explains why investors have been willing to pay that premium. Revenue rose 35% YOY to $1.55 billion, exceeding Wall Street’s $1.48 billion estimate. Adjusted earnings reached $0.62 per share, clearing the $0.45 consensus forecast. Snowflake also produced $237 million in adjusted operating income, ahead of estimates of $185.9 million and equating to a 15.3% margin. 

Snowflake still reported a GAAP operating margin of -17%, but that marked a considerable improvement from -29.7% a year earlier. Billings rose 15% YOY to $1.27 billion, growing more slowly than revenue. That gap does not erase the quarter’s strength, but it deserves attention because billings can offer an early read on future contracted demand.

Why Burry Called Snowflake Overvalued

Michael Burry’s warning that Snowflake is “very overvalued” goes to the heart of the post-earnings debate. Snowflake delivered a strong quarter, but its price-to-sales (P/S) multiple assumes that this level of growth, retention, and margin improvement can continue for years.

So far, the operating data supports the bullish side. Management raised its fiscal 2027 product revenue outlook to $6.07 billion, implying 36% YOY growth and up from its prior forecast of $5.84 billion.

That higher forecast appears supported by management’s near-term expectations. Snowflake expects Q3 product revenue of $1.588 billion to $1.593 billion, implying 37% to 38% YOY growth. The outlook suggests demand is building across the core platform and newer AI offerings, rather than coming from a one-quarter spending surge.

Customer data adds another layer of support. Net revenue retention held at 126%, meaning existing customers spent 26% more than they did one year earlier, a critical indicator for a consumption-based business. Snowflake also had 828 customers generating more than $1 million in trailing 12-month product revenue, up 27% YOY.

Still, the Q2 earnings report does not settle Burry’s valuation argument. The company must prove that AI can generate durable, profitable consumption as usage expands.

Burry has also identified longer-term risks that go beyond quarterly results. He believes data-lake ecosystems could become more exposed if advances in AI and quantum computing weaken cybersecurity defenses. Burry also believes that companies may build internal AI teams and retain more sensitive data on their own systems.

Snowflake’s results clearly justify investor optimism and give bulls the stronger near-term case. Still, Burry’s warning remains relevant because SNOW stock requires years of exceptional growth, improving margins, and sustained customer reliance on its data platform.

Analysts Back Snowflake’s Growth Path

Snowflake is scheduled to report results for its October 2026 quarter on Dec. 2, and the consensus calls for a loss of $0.37 per share. That would mark a meaningful 56% improvement from the $0.84 loss reported in the prior-year period.

Bank of America reiterated a “Buy” rating on SNOW stock after the results and said that Snowflake has room for growth. The firm's view rests on the company’s accelerating product revenue, raised outlook, and expanding AI-related workloads.

Broader analyst sentiment remains firmly positive. Based on 45 analysts with coverage, Snowflake has a consensus “Strong Buy" rating overall. The average price target stands at $404.86, pointing to potential upside of about 20% from current levels.  

Conclusion

Snowflake’s earnings show that its AI and data-platform investments are producing real growth, stronger customer spending, and improved margins. That gives the bulls a solid case. Still, Burry is right to question a stock priced at such a steep premium. Snowflake is more likely to keep outperforming operationally, but its shares may struggle to deliver similar gains unless growth remains exceptional. The business looks stronger than the valuation looks comfortable.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.