Nvidia Share prices are up 715% since the start of 2023, making this very difficult to ignore. The company has added $2.5 trillion to its valuation in that time, thanks entirely to huge demand for its data center chips designed to handle artificial intelligence (AI) workloads.
But the AI ​​industry is expanding rapidly and investors have a growing number of options to consider. CrowdStrike (NASDAQ: CRWD)for example, is a leader in AI-based cybersecurity, and its products have become an essential part of the software stack for companies of all sizes.
Nvidia bears are a rare breed on Wall Street, but so are CrowdStrike bears right now. Here’s why it could be a great addition to any stock portfolio, even if it already includes Nvidia.
CrowdStrike’s strategy resonates with customers
The corporate cybersecurity industry has a history of fragmentation. Different vendors often specialized in different areas (some excelled in cloud security, while others developed best-in-class identity security), forcing companies to merge products from multiple vendors. However, the industry is changing, and cybersecurity providers that can cover all the basics with one platform are winning big.
That has been CrowdStrike’s strategy from the beginning. The Falcon platform is a lightweight solution with 28 modules available to customers in cloud security, identity security, endpoint protection, exposure management and more.
During the first quarter of fiscal 2025 (ended April 30), CrowdStrike said 65% of its customers used five or more modules. Furthermore, the number of customers adopting eight modules increased by as much as 95% compared to the same period a year ago. It’s a clear sign that organizations are rushing to consolidate their cybersecurity needs onto a single platform.
That’s no surprise, as a recent study by International Data Corporation (and sponsored by CrowdStrike) found that companies save $6 for every $1 they invest in the business platform. Additionally, CrowdStrike claims it can make security teams twice as effective by completing incident investigations 66% faster than with a fragmented cybersecurity stack.
AI is the secret sauce behind CrowdStrike’s speed and effectiveness. Automation is the key to dealing with modern threats, which continue to increase in both frequency and sophistication. Data is the lifeblood of AI, and CrowdStrike’s models are trained on more than 2 trillion security events every day, meaning they get faster and more accurate over time.
CrowdStrike exceeded revenue and profit expectations in the first quarter
CrowdStrike generated $921 million in revenue during its fiscal first quarter, up 33% year over year and also well above management’s forecast of $904 million.
But the business results were even more impressive. It achieved its fifth consecutive quarter of generally accepted accounting principles (GAAP) profitability with net income of $42.8 million. This was thanks to careful cost management, with operating costs increasing by just 27% year-on-year, allowing more money to flow into the bottom line.
On a non-GAAP basis, which excludes one-time and non-cash expenses such as stock-based compensation, CrowdStrike delivered net income of $231.7 million, up 70% from the same period. year ago. This translated into non-GAAP earnings per share of $0.93, which also beat management’s expectations of $0.90.
Simply put, CrowdStrike has turned its leadership position in AI and rising revenue growth into an increasingly profitable company, something many of its peers have not been able to achieve until now.
Wall Street is very bullish on CrowdStrike stock
The Wall Street Journal follows 49 analysts covering CrowdStrike stock, and 38 (78%) of them have given it the highest possible Buy rating. Another seven are in the overweight (bullish) camp, and the remaining four recommend holding. No analyst recommends selling.
Their average price target (which typically covers the next 12 to 18 months) for CrowdStrike stock is $397.68, which implies an upside of 17% from where it is trading at the time of writing. However, the stock could crush the Street estimate in the long term.
CrowdStrike ended the first quarter with $3.6 billion in annual recurring revenue, but believes that figure could nearly triple over the next five to seven years to reach $10 billion. Customer preference for a unified platform will play a big role in reaching that milestone, and CrowdStrike is already proving it can save them money while providing the most advanced 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.
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Anthony Di Pizio has no positions in the stocks mentioned. The Motley Fool holds and recommends positions in CrowdStrike and Nvidia. The Motley Fool has a disclosure policy.
Forget Nvidia: Wall Street Is Very Bullish on Another Unstoppable Artificial Intelligence (AI) Stock was originally published by The Motley Fool
