of S&P500 The index bottomed in October 2022 after a 10-month decline that culminated in a technical bear market. It took more than a year for the index to hit its new high, which was recorded in January 2024. This was the last hurdle the S&P 500 had to clear before investors officially recognized a new bull market.
Many blue-chip stocks are currently hovering near all-time highs, but that doesn’t mean it’s too late to buy. cloud strike (NASDAQ:CRWD) is one of them. The company is a leading provider of artificial intelligence (AI)-powered cybersecurity products, and its stock has soared after the company’s impressive financial results.
Here’s why it’s not too late for investors to buy CrowdStrike stock.
The frequency of cyber attacks is increasing due to the influence of AI
Advanced tools such as generative AI are weaponized by malicious actors to rapidly create realistic content designed to trick employees of large organizations into handing over sensitive information. for example, palo alto networks Phishing emails have increased 10x in the past 12 months alone, and this is solely due to AI.
Employees are the most vulnerable in any company, as they constantly interact with the outside world through email, phone calls, and messaging platforms. CrowdStrike says that 90% of successful cyberattacks originate from endpoints, i.e. computers or devices that employees use to perform their daily tasks.
It is unrealistic to expect all employees to become security experts, so automated cyber protection is key. That’s why CrowdStrike’s AI approach is so powerful. Its models are trained on massive amounts of data, including 2 trillion security events every day. CrowdStrike also makes more than 180 million attack metric determinations every second to determine the intent of malicious actors. This amount of processing would not be possible without AI.
CrowdStrike’s flagship Falcon platform is more than just an endpoint product. It includes cloud security, identity security, and breach management (among other modules) to provide a comprehensive solution for enterprises. This allows them to consolidate their cybersecurity spending with one provider, and as of the fourth quarter of fiscal 2024 (ending January 31), the majority (64%) of CrowdStrike customers had at least five Falcon I was using a module.
CrowdStrike also said that the number of customers using its eight modules has more than doubled compared to a year ago, highlighting how business needs are expanding.
CrowdStrike continues to grow rapidly, but also profitably
CrowdStrike generated record revenue of $3 billion in fiscal year 2024 (ending January 31), a 36% increase from fiscal year 2023. The company could grow more than 30% in his 2025 fiscal year as well, and is expected to generate nearly $4 billion in revenue in 2025. High end of management guidance.
However, CrowdStrike’s profitability may be the bigger story. The company achieved net income of $89.3 million in fiscal year 2024. While this sounds like a modest number on a multi-billion dollar revenue, it was a positive change from the $183.2 million net loss incurred in the prior year.
On a non-GAAP (adjusted) basis, CrowdStrike’s net income increased 104% year over year to $751.7 million. This number excludes one-time, non-cash expenses such as stock-based compensation and gives investors a better understanding of how profitable CrowdStrike’s business operations actually are.
Profitability is currently a focus for investors because of the difficult economic environment, with most technology companies adept at rapid growth, but few companies restraining spending to generate profits. This is because it has become clear that strong growth cannot be sustained.
Why it’s not too late to buy CrowdStrike stock now
CrowdStrike’s stock price has risen more than 400% over the past five years and is trading near all-time highs, but the company’s long-term financial projections suggest it’s not too late to support this growth story. .
Annual recurring revenue (ARR) at the end of fiscal 2024 was $3.4 billion, which is different from actual revenue because it measures the expected future value of existing subscriptions. But management hopes to grow that number to $10 billion within the next five to seven years.
But even if CrowdStrike achieves its ARR goal, it will represent only a fraction of the company’s estimated total addressable market of $225 billion in 2028.
CrowdStrike’s current market capitalization is $80 billion, and the price/sales (P/S) ratio based on sales in fiscal 2024 is 26.2 times. This is quite expensive compared to other cybersecurity giants. For example, Palo Alto Networks stock trades at a P/S ratio of 13.8.
But the stock market is a forward-looking machine. If management’s predictions prove accurate over the next seven years, CrowdStrike stock could actually be a bargain at today’s price.
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Anthony Di Pizio has no position in any stocks mentioned. The Motley Fool has a position in and recommends CrowdStrike and Palo Alto Networks. The Motley Fool has a disclosure policy.
A new bull market has begun, but it’s not too late to buy this unstoppable artificial intelligence (AI) stock Original article published by The Motley Fool
