Snowflake (SNOW 10.97%) stock floated 8.9% higher through 10:25 a.m. ET Thursday after the company posted top- and bottom-line "beats" in its first-quarter earnings report last night.

Heading into the report, Wall Street analysts forecast Snowflake to earn $0.21 per share on $1.01 billion in revenue. In fact, Snowflake earned $0.26 per share on sales of $1.04 billion.

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Snowflake's Q1 earnings

The provider of artificial intelligence (AI) software reported 26% revenue growth in Q1, and a 124% "net revenue retention rate" -- meaning effectively all existing Snowflake customers renewed their subscriptions, and the company added even more new customers. Remaining performance obligations, or backlog, grew 34%, foreshadowing additional sales growth to come.

That's the good news. The bad news is that despite the $0.26 profit analysts are cheering about, Snowflake's earnings as calculated according to generally accepted accounting principles (GAAP) were negative -- a $1.29-per-share loss that was actually worse than last year.

But the other good news is that free cash flow was positive. The company reported $183.4 million in positive cash profits, calculated as operating cash flow minus capital expenditures.

Is Snowflake stock a buy?

Investors seem happy with that number, but I consider it a yellow flag.

Why? Well basically, because last year in Q1, Snowflake generated $339 million in free cash flow. So this week's number actually represents a 46% decline in FCF. So while sales are surging, and Snowflake CEO Sridhar Ramaswamy may be doing a good job of convincing customers that "every enterprise [can] achieve its full potential through data and AI," Snowflake itself isn't making nearly as much money on AI now as it did a year ago.

With Snowflake stock costing nearly 79 times FCF today, it may be time to sell.