According to Grand View Research, sales of artificial intelligence (AI) in hardware, software and services are expected to reach $1.8 trillion by 2030, up from $279 billion in 2024. That translates into 37% annual growth in next six years. Opportunities of that magnitude come about once every ten years.
The last comparable technological transformation was probably the advent of cloud computing. That market is now approaching $1 trillion, and patient investors have been buying shares Amazon, AlphabetAnd Microsoft ten years ago they have the S&P500 passed several times. AI could be just as lucrative, if not more so.
CrowdStrike (NASDAQ: CRWD) misses the hype surrounding it Nvidia, but the company will benefit from AI and has already demonstrated its ability to create value for investors. The stock is up 503% since its public debut in June 2019, and the stock has more than doubled in the past year alone.
Despite these returns, 92% of Wall Street analysts covering CrowdStrike rate the stock as a Buy, and the remaining 8% rate it as a Hold. No analyst recommends selling. Here’s what investors need to know.
CrowdStrike has a strong presence in several cybersecurity markets
CrowdStrike is a leader in endpoint security software, an industry concerned with protecting devices such as servers and desktops. The company is also gaining market share in the endpoint market faster than its peers, according to a study by the company Morgan Stanley. One benefit of leadership in that particular cybersecurity sector is that companies collect most of their threat intelligence from endpoints, so CrowdStrike has robust data to support its artificial intelligence (AI) models.
CEO George Kurtz says the CrowdStrike Falcon platform has the “most effective and accurate AI models to prevent attacks.” Analysts at Frost & Sullivan drew a similar conclusion in a report published in 2022: “CrowdStrike is an industry leader in the application of artificial intelligence/machine learning to endpoint security.”
Leadership in endpoint security has also helped the company expand into other industries. CrowdStrike is a recognized leader in cloud security, identity threat detection, risk-based vulnerability management, and managed detection and response services. The company also has one of the fastest growing SIEM (Security Information and Event Management) solutions on the market and has recently introduced software products for data protection and IT automation.
Additionally, CrowdStrike is tapping into the demand for technology popularized by ChatGPT with its new generative AI assistant, Charlotte AI. The conversational interface helps security teams quickly assess their IT environments, identify threats and take corrective action. Charlotte AI also recommends ways to proactively reduce risk.
Management says Charlotte AI will address a $7 billion opportunity by 2028. Other companies are building similar conversational assistants, but Morgan Stanley analysts believe CrowdStrike is one of the software vendors “best positioned” to monetize generative AI because of its scale and unique data.
CrowdStrike is one of the fastest growing enterprise software companies
CrowdStrike reported fourth-quarter financial results that exceeded expectations. Revenue rose 33% to $845 million, and non-GAAP net income more than doubled to $0.95 per diluted share. The company also reported a gross retention rate of 98%, meaning it retained almost all of its customers.
CrowdStrike delivered first-quarter revenue growth and non-GAAP net income growth of 31% and 63%, respectively. Management also said full-year revenue and non-GAAP net profit could rise 30% and 32%, respectively. That makes CrowdStrike one of only three publicly traded software companies that can achieve revenue growth of more than 30% this year, according to Morgan Stanley.
CrowdStrike stock is trading at a reasonable valuation
Cyber attacks are becoming increasingly expensive and sophisticated. Cloud migration, software adoption and the proliferation of connected devices are creating new vulnerabilities, and annual damages caused by cybercrime are expected to increase by 44% to $13 trillion by 2028.
Cybersecurity is not a discretionary expense, but a critical part of the enterprise IT ecosystem. CrowdStrike is well positioned to seize that opportunity given its leadership in endpoint security, its growing influence in other cybersecurity verticals, and its offering of new products such as Charlotte AI.
Wall Street analysts expect CrowdStrike to grow revenue 29% annually over the next five years. That consensus estimate makes the current valuation of 27.9 times sales seem reasonable. Patient investors should consider buying a small position in this growth stock now.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennevine holds positions at Amazon, CrowdStrike and Nvidia. The Motley Fool holds positions in and recommends Alphabet, Amazon, CrowdStrike, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
1 Supercharged Artificial Intelligence (AI) Stock Rises 500% in 5 Years to Buy Now, According to Wall Street (Hint: Not Nvidia) was originally published by The Motley Fool
