Pick Snowflake Stock Over Palantir?

Artificial intelligence technology has been the biggest buzzword in the market over the last two years, with the focus largely being on big-tech stocks and semiconductor names. However, two big data stocks are betting big on the AI revolution. Palantir and Snowflake (NYSE: SNOW) are both high-growth software companies. Palantir stock has been a stellar performer over the past twelve months, rising by over 500%, compared to Snowflake, which has gained about 52% over the same period. To be sure, the two companies are quite different. While Palantir is focused on specialized big data analytics for mission-critical applications in the government and commercial space, Snowflake provides its cloud data warehousing services to a more diverse customer base. Here’s why we think Snowflake might be the better bet compared to Palantir at the moment, based on the analysis of Growth, Profitability, Financial Stability, and Downturn Resilience.

Snowflake’s Growth Is Cooling, Palantir Is Picking Up

Starting with growth, Snowflake has posted faster top-line expansion over the last few years, with a 3-year average revenue growth rate of 44.8% versus Palantir’s 23.9%. Even on a trailing 12-month basis, Snowflake’s revenue grew by 29.2% to $3.6 billion, compared to Palantir’s 33.5% rise to $2.9 billion. However, Palantir has been accelerating lately. Sales during the most recent quarterly grew by 39.3%, outpacing Snowflake’s 27.4%. While both firms are expanding rapidly, Palantir’s growth has been picking up, led by notable government contract wins and progress with its commercial business, while Snowflake’s growth has been cooling due to mounting competition from the likes of Databricks and a gradually maturing cloud market. That said, Snowflake’s early-mover status in data warehousing explains part of its historical edge in growth rates.

Profitability And Cash Flows 

In terms of profitability, the gap is even wider. For the last four-quarter period, Palantir Technologies’ Net Income was $571 million, indicating a strong net income margin of 18.3% (vs. 11.6% for the S&P 500). Palantir Technologies’ Operating Cash Flow (OCF)  over this period was $1.3 billion, pointing to a considerably high OCF margin of 42.8% (vs. 14.9% for the S&P 500). In contrast, Snowflake’s metrics are far worse. For the same period, Snowflake’s Net Income was -$1.3 billion – indicating a very poor net income margin of -35.5% (vs. 11.6% for the S&P 500). Now, to be sure, this is in part due to Snowflake issuing considerable stock-based compensation. Still, this remains a concern, as stock-based compensation increases the share count and dilutes existing shareholders. Snowflake’s Operating Cash Flow (OCF)  over this period was $960 million, yielding a moderate OCF margin of 26.5%.

No Balance Sheet Issues Here

From a financial stability perspective, both companies boast strong balance sheets, but Palantir has a slight edge. Palantir Technologies’ debt figure was $245 million at the end of the most recent quarter, while its market capitalization is $310 billion (as of 6/3/2025). This implies a very low Debt-to-Equity Ratio of 0.1% (vs. 19.9% for the S&P 500). Cash (including cash equivalents) accounts for $5.4 billion of the $6.7 billion in total assets, yielding a very strong Cash-to-Assets Ratio of 80.6% (vs. 13.8% for the S&P 500). Snowflake’s debt stood at $2.7 billion, while its market cap is $70 billion, implying a Debt-to-Equity Ratio of 3.9% – still very healthy, but a notch higher than Palantir’s. Cash makes up $4.6 billion of Snowflake’s $9.0 billion in assets, giving it a Cash-to-Assets Ratio of 51.3%. These metrics suggest both companies are well-protected from liquidity concerns, though Palantir’s leaner balance sheet and larger cash buffer is notable.

Downturn Resilience

Finally, market downturn resilience is a concern for both names. Palantir stock fell over 84% during the 2022 inflation shock but has since fully recovered and made new highs. Snowflake dropped nearly 72% during the same period and has yet to reclaim its prior peak, reflecting ongoing investor caution. Both companies show extreme volatility in bear markets, but Palantir’s recovery has been more robust, possibly owing to its growing profitability and improving operational metrics. Ultimately, both stocks remain highly sensitive to macroeconomic conditions and investor sentiment.

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Elephant in the room: Valuation

Valuation sharply distinguishes the two stocks. Palantir stock trades at exceptionally high valuation multiples: a price-to-sales (P/S) ratio of 93.4 and a price-to-free cash flow (P/FCF) ratio of 218. This dwarfs Snowflake’s still-elevated P/S of 18.9 and P/FCF of 71.3. Sure, Palantir’s growth rates are on the uptrend compared to Snowflake, which is seeing growth cool off. Moreover, Palantir’s founders have considerable influence within the Trump Administration, and potentially higher federal spending on national security and immigration under Trump are expected to boost demand for Palantir’s software. However, there’s a strong case for Snowflake too. Clients rely on Snowflake to store and manage their data on its cloud platform. Given this access, Snowflake’s AI tools could see stronger adoption. For instance, customers can increasingly use natural language prompts to access and query their data. As the cost of running AI models decreases, customers may become more interested in using generative AI tools for more use cases, thereby driving more demand for Snowflake’s data storage and processing services. While Snowflake’s weaker profitability and slower growth in recent quarters are a concern, we believe the risk-reward trade-off might be more favorable for Snowflake stock, making it the better pick.