NVIDIA It's very hard to ignore, with shares soaring 715% since the beginning of 2023. The company has added $2.5 trillion to its valuation in that time, all thanks to surging demand for data center chips designed to handle artificial intelligence (AI) workloads.
But the AI industry is expanding rapidly, providing more opportunities for investors to consider. Crowdstrike (Nasdaq: CRWD)For example, is a leader in AI-based cybersecurity, and its products have become an integral part of the software stack for businesses of all sizes.
Nvidia bears are rare on Wall Street, but CrowdStrike bears are also rare right now. Here's why CrowdStrike could be a great addition to a stock portfolio that already includes Nvidia.
CrowdStrike's strategy resonates with customers
The enterprise cybersecurity industry has a history of fragmentation. Different vendors often have different specialties, some excel in cloud security, others develop best-in-class identity security, and companies have had to piece together products from multiple providers. But the industry is changing, and cybersecurity vendors that can cover all bases with one platform are finding greater success.
This has been CrowdStrike's strategy from the start: its Falcon platform is a lightweight solution that offers customers 28 modules covering cloud security, identity security, endpoint protection, exposure management and more.
CrowdStrike announced that 65% of its customers were using five or more modules in the first quarter of fiscal 2025 (ending April 30). Additionally, the number of customers that adopted eight modules jumped 95% compared to the same period last year, a clear indication of the rush by organizations to consolidate their cybersecurity needs onto a single platform.
This isn't surprising, considering a recent study by International Data Corporation (sponsored by CrowdStrike) found that companies can save $6 for every $1 they invest in their platform. Additionally, CrowdStrike claims that it can complete incident investigations 66% faster than with a fragmented cybersecurity stack, making security teams twice as efficient.
AI is the secret to CrowdStrike's speed and effectiveness. Automation is key to combating modern threats, which continue to grow in both frequency and sophistication. Data is the lifeblood of AI, and CrowdStrike's models are trained on over 2 trillion security events every day, making them faster and more accurate over time.
CrowdStrike beats first-quarter revenue and earnings expectations
CrowdStrike generated revenue of $921 million in the first quarter, up 33% from the same period a year ago and well above management's expectations of $904 million.
But the company's bottom line was even more impressive: The company posted its fifth consecutive generally accepted accounting principles (GAAP) profitable quarter with net income of $42.8 million, thanks to prudent cost management that saw operating expenses increase just 27% year over year, funneling more money into the bottom line.
On a non-GAAP basis, which excludes one-time and non-cash charges such as stock-based compensation, CrowdStrike achieved net income of $231.7 million, up an impressive 70% from the same period last year. This equates to non-GAAP earnings per share of $0.93, also beating management's expectations of $0.90.
Simply put, CrowdStrike has translated its leadership position in AI and exponential revenue growth into an increasingly profitable business, something that many of its peers have been unable to do until now.
Wall Street is very bullish on CrowdStrike stock
The Wall Street Journal We track 49 analysts covering CrowdStrike stock, of which 38 (78%) have given it the highest rating of Buy. Another seven are in the Overweight (bullish) camp, while the remaining four recommend Hold. No analysts recommend Sell.
The average target price for CrowdStrike shares (typically for the next 12 to 18 months) is $397.68, which suggests a 17% upside from the stock's price at the time of writing, although over the longer term the stock could outperform Street expectations.
CrowdStrike finished the first quarter with $3.6 billion in annual recurring revenue and believes it can nearly triple that figure to $10 billion over the next five to seven years. Customer preference for an integrated platform will be key to achieving this milestone, and CrowdStrike has already proven it can reduce costs for its customers while providing cutting-edge AI-powered protection.
CrowdStrike is a best-in-class cybersecurity provider and could be a best-in-class cybersecurity and AI stock for any portfolio.
Where to invest $1,000 right now
When the analyst team has a tip on a stock, it's worth listening to — after all, the newsletter they've been running for 20 years is Motley Fool Stock Advisorthe market size has more than tripled.*
They made it clear what they believed. Top 10 Stocks Stocks investors should buy right now… and CrowdStrike made the list, but here are nine other stocks you might have missed.
View 10 stocks
*Stock Advisor returns as of June 3, 2024
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CrowdStrike and Nvidia. The Motley Fool has a disclosure policy.
“Forget NVIDIA: Wall Street is very bullish on unstoppable artificial intelligence (AI) stocks” was originally published by The Motley Fool.
