Snowflake vs. DELL: Which AI Infrastructure Stock Is the Better Buy?

The Case for SNOW Stock

SNOW is benefiting from strong adoption and increasing usage of its platform, as reflected by the net revenue retention rate of 126% in the first quarter of fiscal 2027. In the same quarter, Snowflake reported 13,912 total customers and added 616 net new customers, up 38% year over year, including 13 new Forbes Global 2000 customers. The company now has 779 customers spending more than $1 million annually, up 29% year over year, and the number of customers spending more than $10 million annually increased to 64. 

Snowflake’s AI products, including Snowflake Intelligence and Cortex Code (CoCo), are seeing rapid adoption, with CoCo already used by more than 7,100 accounts. These products allow both business users and developers to interact with enterprise data and build AI-powered applications directly within Snowflake, all while maintaining strict governance. With the intended acquisition of Natoma, Snowflake is extending its agentic control plane to everyday business applications, enabling users to perform tasks like sending emails or summarizing Slack conversations within a governed environment.

Further strengthening this AI strategy, Snowflake recently announced dynamic model routing across Cortex AI Gateway and its flagship AI products, enabling enterprises to balance AI quality and costs by automatically selecting the most suitable model for each task. The company also expanded access to leading open models, strengthening its AI capabilities and helping customers improve the efficiency of their intelligence.

The Case for DELL Stock

Dell Technologies is benefiting from surging demand for AI infrastructure. In the first quarter of fiscal 2027, the company reported record revenues of $43.8 billion, up 88% year over year, with AI server revenues reaching $16.1 billion and a record AI backlog of $51.3 billion. This robust performance is driven by customers across neocloud, sovereign and enterprise segments seeking to secure supply and modernize their IT environments.

A key factor behind Dell Technologies’ upside is its broad and innovative portfolio. The company has introduced new infrastructure solutions, such as the Dell AI factory with NVIDIA, PowerRack, and advanced PowerEdge servers, all designed to support AI, HPC and enterprise workloads. These offerings enable customers to deploy production-ready AI locally, addressing needs for performance, security and data sovereignty.

Dell Technologies’ leadership in rack-scale infrastructure and its expanding ecosystem partnerships, including collaborations with NVIDIA, Google Cloud and OpenAI, further strengthen its competitive position. The company is also seeing increased attach rates for storage and services, particularly in unstructured data solutions that are critical for AI workloads.

Dell Technologies’ innovative portfolio, expanding partner base, and growing AI footprint are significant growth drivers. For the second quarter of fiscal 2027, Dell Technologies expects revenues between $44 billion and $45 billion, up roughly 50% at the midpoint of $44.5 billion. ISG is expected to grow roughly 75%, supported by $15.5 billion in AI server revenues.

Price Performance and Valuation of SNOW and DELL

In the year-to-date period, SNOW shares have rallied 48.3%, underperforming DELL’s shares, which have appreciated 272.3%. The outperformance of DELL can be attributed to strong demand for AI servers, driven by ongoing digital transformation and heightened interest in generative AI applications. 

Despite Snowflake’s expanding AI portfolio and partner base, the company suffers from the variability of consumption as customers optimize spend and AI products that carry lower gross margins than the core platform. Integration and hiring tied to acquisitions also weigh on free cash flow margins. Snowflake expects a 150-basis-point drag to its non-GAAP adjusted free cash flow margin from the Observe acquisition, and management reiterated this impact in its fiscal 2027 outlook. Stiff competition also remains a concern.

SNOW and DELL Stock Performance

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SNOW and DELL’s shares are currently overvalued, as suggested by a Value Score of F and D.

In terms of forward 12-month Price/Sales, SNOW shares are trading at 16.36X, lower than DELL’s 1.65X.

SNOW and DELL Valuation

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How Do Earnings Estimates Compare for SNOW & DELL?

The Zacks Consensus Estimate for SNOW’s fiscal 2027 earnings is pegged at $1.97 per share, which has increased by a penny over the past 30 days. This indicates a 57.60% increase year over year.

The Zacks Consensus Estimate for DELL’s fiscal 2027 earnings is pegged at $19.16 per share, which has increased 1.91% over the past 30 days. This indicates an 86.02% increase year over year.

Conclusion

While both SNOW and DELL stand to benefit from the AI infrastructure boom, DELL’s stronger earnings momentum, diversified growth drivers and consistent performance suggest it may offer greater upside potential in the near term.

Despite SNOW’s robust portfolio, the company suffers from challenging macroeconomic uncertainties and variability of consumption as customers optimize spending on AI products that carry lower gross margins than the core platform.  Stiff competition also remains a concern.

Currently, Dell Technologies sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Snowflake, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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