Days ago, fears about artificial intelligence (AI) rattled the technology sector. Anthropic CEO Dario Amodei had just called on the artificial intelligence (AI) industry to reduce the pace at which AI systems are being created. SpaceX (SPCX) CEO Elon Musk agreed, writing “Dario is right” on X. Even OpenAI CEO Sam Altman concurred that the industry needed to “pace the frontier.”
Of course, comments like that are inevitably going to rattle tech stocks, fueling anxiety that the industry could see a cool-down of the massive, multiyear spending on chips, data centers, and other AI infrastructure. However, while these comments shook most of the tech sector, cybersecurity stocks like CrowdStrike (CRWD) found reason to rally. That’s because, whether AI slows or not, companies will still need to secure their networks, protect sensitive information, and control who and what can access their systems. That’s where companies like CrowdStrike can help.
More Top Stocks Daily: Go behind Wall Street’s hottest headlines with Barchart’s Active Investor newsletter.
www.barchart.com AI Has Created an Expanding Security Problem
CrowdStrike is best-known for Falcon, its cloud-based cybersecurity platform that helps companies protect endpoints, cloud workloads, identities, and other critical parts of their technology infrastructure. The platform could become increasingly important as businesses deploy AI-powered tools and autonomous agents. That’s important, especially if AI agents can analyze data, communicate with other applications, and complete tasks with limited human involvement. The problems that could cause also won’t just disappear if the development of AI systems slows. After all, many companies already use AI, cloud computing, and automated systems throughout their operations. The infrastructure surrounding these systems still needs to be monitored and protected.
Even better, identity security could be especially important for CrowdStrike. Attackers often try to gain access by stealing credentials rather than breaking through the front door of a network. The growth of autonomous agents may add countless new machine identities that also require carefully controlled access. CrowdStrike has been investing in that area. Earlier this year, the company acquired identity-security firm SGNL, whose technology is designed to manage access continuously across human, machine, and AI identities.
What Could Keep CrowdStrike Stock Moving?
Even with its advantages, I wouldn’t rush to buy CRWD stock just yet. That’s because the stock is a bit overbought following its move from around $180 to the $250 level. What investors may want to do is wait for a pullback. Plus, for the remainder of the year, CrowdStrike’s performance will ultimately depend on business execution rather than AI headlines alone. Investors should watch annual recurring revenue (ARR), new customer additions, and the adoption of multiple Falcon products. Profit margins and free cash flow will also matter.
The stock’s valuation is something to consider as well. CRWD stock has a sky-high price-to-earnings (P/E) ratio of 2,263 times, a price-to-book (P/B) ratio of 47.3 times, and a price-to-sales (P/S) ratio of 50.5 times.
That said, investors need to consider that the genie is out of the bottle, as noted by CrowdStrike CEO George Kurtz per Seeking Alpha. Even if AI development slows, the security risks AI has created are already here. “The genie’s out of the bottle,” Kurtz noted, pointing to frontier and open-weight models that are already available. Kurtz pointed out that AI gives “every criminal and lone actor elite execution,” making cyberattacks easier to pull off. That is a beneficial trend for cybersecurity firms like CrowdStrike.
What Do Analysts Say About CRWD Stock?
Overall, CrowdStrike has a consensus “Moderate Buy” rating on Wall Street. Of the 50 analysts covering CRWD stock, 33 have a “Strong Buy” rating, three have a “Moderate Buy” rating, 12 have a “Hold” rating, and two have a “Strong Sell” rating. The mean target price of $239.31 has already been surpassed. Meanwhile, the high price target of $425 implies potential upside of 70% from current levels.
With CrowdStrike, AI may change the cybersecurity challenge, but it is unlikely to reduce the need for protection. In fact, digital security could become far more complicated with the advent of autonomous agents, which in turn only creates opportunity for CrowdStrike.
So, CrowdStrike has a strong long-term opportunity. In the short term, however, investors may want to wait for this fundamentally and technically stretched stock to cool off a bit first.
www.barchart.com On the date of publication, Ian Cooper did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
Intel vs. TSMC: One Chip Stock Controls 72.5% of the Foundry Market. The Other Is Mounting a Comeback. CrowdStrike Stock Rallies as AI Security Fears Create a Major Opportunity. How to Play CRWD Here. Generac Rallies on Power Deal With Amazon. How to Play GNRC Stock Now. A $26 Million Reason Why GameStop Stock Is Up Today