Snowflake Plunges 2.65% as Databricks’ $100B Valuation Sparks Sector Rivalry—What’s Next for Cloud Data Giants?

Summary
• Snowflake (SNOW) drops 2.65% to $192.99, its intraday low at $191.32
• Databricks secures $100B valuation, signaling AI-driven data infrastructure competition
• Options volatility surges, with 20 contracts trading above 89% implied volatility
• Sector peers like Dropbox (DBX) rally 0.91% as AI infrastructure demand intensifies

Snowflake’s sharp decline reflects investor anxiety over Databricks’ valuation leap, which underscores the intensifying battle for dominance in AI-powered data platforms. With both firms vying to become the default substrate for enterprise AI, the market is recalibrating to assess Snowflake’s ability to defend its position against a rival now valued at nearly double its own. The stock’s 2.65% drop, coupled with elevated options activity, highlights the pivotal role of AI monetization in shaping the cloud data landscape.

Databricks’ $100B Valuation Shakes Snowflake’s Market Position
Databricks’ $100B funding round, a 60% valuation jump from December, has intensified scrutiny on Snowflake’s AI strategy. The move positions Databricks as a formidable rival in data engineering and governance, areas where Snowflake has historically led. Investors are now questioning whether Snowflake’s recent 26% YTD gains justify its valuation against a competitor with higher growth multiples and a lakehouse model that challenges Snowflake’s warehouse-centric approach. The stock’s intraday low of $191.32 reflects fears that Databricks’ AI-first strategy—fueled by $3.7B in annualized revenue and 50% growth—could erode Snowflake’s market share in enterprise data workflows.

Data Processing Sector Volatility as Databricks Rivals Snowflake
The data processing sector is polarized, with Databricks’ private valuation creating a benchmark that pressures Snowflake to accelerate AI monetization. Dropbox (DBX), a sector leader, rose 0.91% as investors rotated into AI infrastructure plays, signaling confidence in the broader category. However, Snowflake’s 2.65% drop highlights its vulnerability to competition from a private rival with a stronger AI narrative. The sector’s mixed performance underscores the criticality of execution in AI integration, with Snowflake’s upcoming Q2 earnings on August 27 serving as a key inflection point.

Options and ETF Plays Amid Snowflake’s Volatility
• 200-day average: $176.20 (below current price)
• RSI: 34.24 (oversold)
• MACD: -4.76 (bearish divergence)
• Bollinger Bands: $186.25–$227.99 (current price near lower band)
• SNOU ETF: -5.27% (leveraged exposure to SNOW)

Snowflake’s technicals suggest a short-term bearish trend but a long-term bullish setup. The RSI at 34.24 indicates oversold conditions, while the MACD histogram (-1.28) and bearish crossover signal near-term weakness. However, the 200-day average ($176.20) and Bollinger Bands ($186.25–$227.99) suggest a potential rebound from current levels. The T-REX 2X Long SNOW ETF (SNOU), down 5.27%, offers leveraged exposure but remains volatile. For options, two contracts stand out:

• SNOW20250829P185
- Type: Put
- Strike: $185
- Expiry: 2025-08-29
- IV: 89.77% (high volatility)
- Leverage: 23.75% (high)
- Delta: -0.362 (moderate bearish sensitivity)
- Theta: -0.2045 (moderate time decay)
- Gamma: 0.0125 (moderate price sensitivity)
- Turnover: 1,224,833 (high liquidity)
- Why it stands out: High leverage and IV make this put ideal for a 5% downside scenario. Projected payoff: $7.49 (max(0, 185 - 183.34)).

• SNOW20250829P190
- Type: Put
- Strike: $190
- Expiry: 2025-08-29
- IV: 90.18% (high volatility)
- Leverage: 18.45% (high)
- Delta: -0.428 (strong bearish sensitivity)
- Theta: -0.1717 (moderate time decay)
- Gamma: 0.0130 (high price sensitivity)
- Turnover: 140,587 (high liquidity)
- Why it stands out: Strong delta and gamma make this put responsive to price swings. Projected payoff: $2.49 (max(0, 190 - 183.34)).

Aggressive bears should target SNOW20250829P190 if $185 breaks, while SNOU ETF offers leveraged downside exposure.

Backtest Snowflake Stock Performance
The backtest of Snowflake (SNOW) after a -3% intraday plunge shows favorable performance metrics. The 3-day win rate is 55.31%, the 10-day win rate is 55.31%, and the 30-day win rate is 56.59%. This indicates that following an intraday plunge, SNOW tends to exhibit positive returns in the short term. The maximum return during the backtest period was 7.70%, which occurred on day 59, suggesting that there is potential for a strong rebound after a dip.

Snowflake’s AI Defense Hinges on Q2 Earnings and Databricks’ IPO Timeline
Snowflake’s near-term trajectory depends on its ability to demonstrate AI-driven revenue growth in Q2 earnings and differentiate its platform from Databricks’ lakehouse model. The stock’s oversold RSI and bearish MACD suggest a potential rebound, but sustained momentum will require concrete execution on AI monetization. Investors should monitor Databricks’ IPO timeline and Snowflake’s partnership announcements for signals of competitive positioning. With Dropbox (DBX) up 0.91%, the sector remains volatile—watch for $185 support or a breakout above $198.24 (previous close) to gauge the next move.