Forget Nvidia: Wall Street is bullish on another unstoppable artificial intelligence (AI) stock.

WhatsApp Group Join Now
Telegram Group Join Now
Instagram Group Join Now

Thanks to the rapid expansion of the industry, investors can look beyond Nvidia to find opportunities in artificial intelligence (AI).

Nvidia The stock is up 715% since the start of 2023, making it very hard to ignore. The company has added $2.5 trillion to its value in that time, thanks entirely to red-hot demand for data center chips designed to process artificial intelligence (AI) workloads.

But the AI ‚Äč‚Äčindustry is expanding rapidly, and investors have a growing number of opportunities to consider. Crowd strike (CRWD 2.54%)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 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 one that already includes Nvidia.

Image source: Getty Images.

CrowdStrike's strategy is resonating with customers.

The enterprise cybersecurity industry has a history of fragmentation. Different vendors often specialized in different areas — some specialized in cloud security, while others developed best-in-class identity security — so businesses had to consolidate products from multiple providers. However, the industry is changing, and cybersecurity vendors that can cover all the bases with one platform are finding great success.

This has been CrowdStrike's strategy from the beginning. Its Falcon platform is a lightweight solution with 28 modules available to customers covering cloud security, identity security, endpoint protection, exposure management and more.

During the first quarter of fiscal 2025 (ended April 30), CrowdStrike said 65 percent of its customers were using five or more modules. In addition, the number of users adopting the eight modules increased by 95% compared to the year-ago period. This is a clear sign that organizations are moving quickly to consolidate their cybersecurity needs on one platform.

That's not surprising, considering a recent study by International Data Corporation (and sponsored by CrowdStrike) found that companies save $6 for every $1 in company platforms. Additionally, CrowdStrike claims it can make security teams twice as effective with incident investigations 66% faster than a fragmented cybersecurity stack.

AI is the secret sauce behind CrowdStrike's speed and effectiveness. Automation is key to combating modern-day threats, which continue to grow in both frequency and sophistication. Data is the lifeblood of AI, and CrowdStrike's models are trained on more than 2 trillion security events per day, which means they get faster and more accurate over time.

CrowdStrike beat revenue and earnings expectations in Q1.

CrowdStrike generated $921 million in revenue during the fiscal first quarter, up 33% year-over-year and comfortably beating management's forecast of $904 million.

But the company's bottom-line results were even more impressive. It delivered its fifth consecutive quarter of generally accepted accounting principles (GAAP) profit with net income of $42.8 million. This was due to careful cost management which saw operating expenses grow by only 27% year-on-year, allowing more money to flow to the bottom line.

On a non-GAAP basis, which strips out one-time and non-cash expenses such as stock-based compensation, CrowdStrike delivered $231.7 million in net income, a whopping 70% increase from the year-ago period. This translated to $0.93 in non-GAAP earnings per share, which was better than management's guidance of $0.90.

Simply put, CrowdStrike has turned its leadership position in AI and its growing revenue growth into a profitable business, something many of its peers have so far failed to achieve.

Wall Street is very bullish on CrowdStrike stock.

The Wall Street Journal CrowdStrike tracks 49 analysts who cover the stock, and 38 of them (78%) have given it a most likely buy rating. Another seven are in the overweight (faster) camp, and the remaining four recommend holding. No analyst recommends selling.

Their average price target for CrowdStrike stock (which typically spans the next 12 to 18 months) is $397.68, which is a 17% upside from where it trades as of this writing. However, the stock could crush long-term Street estimates.

CrowdStrike ended Q1 with $3.6 billion in annual revenue, but believes it can nearly triple that number to $10 billion over the next five to seven years. Consumer preference for a unified platform will be critical to achieving this milestone, and CrowdStrike is already proving that it can save them money while providing cutting-edge AI-powered security.

CrowdStrike is a best-in-class cybersecurity provider, and could be the best-in-class cybersecurity and AI stock for any portfolio.

WhatsApp Group Join Now
Telegram Group Join Now
Instagram Group Join Now

Leave a Comment