SentinelOne(NYSE: S) developed the Singularity cybersecurity platform, which features a suite of products powered by artificial intelligence (AI) to help businesses automate everything from threat detection to incident response.
SentinelOne went public in June 2021 at $35 per share, before more than doubling to a record high of $78.50 within just a few months. Its valuation reached an unsustainable level at that point, and its stock proceeded to decline by more than 82%.
While SentinelOne stock remains 75% below its all-time high, its business is in better shape than ever. Its revenue growth accelerated in the final quarter of fiscal 2025 (ended January 31), and the company is making solid progress toward profitability. With cyber threats constantly on the rise, demand for advanced cybersecurity tools will only grow over time, so here's why SentinelOne stock could be a great addition to any portfolio on the dip.
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A leader in AI-powered cybersecurity
Gone are the days when businesses could operate with basic antivirus software and a firewall. Modern organizations need holistic cybersecurity solutions that protect their cloud networks, the identities of their employees, and the endpoints (computers and devices) they use every day. Singularity provides exactly that.
The platform comes with a suite of unique AI-powered tools. Storyline, for example, can summarize incidents when they happen so managers can easily identify the root cause without spending hours investigating manually. Then there is Purple AI, an AI assistant embedded into Singularity that can be prompted to hunt for specific threats, dive deeper into incidents, and uncover hidden risks within an organization's network. It understands natural language, so even employees in non-technical roles can harness its capabilities.
In the 2024 MITRE ATT&CK Evaluations, which measure a cybersecurity provider's performance against a range of threats, SentinelOne was a step above the competition. It detected threats with 100% accuracy and zero detection delays, which means it identified them in real time. Finally, thanks to its AI-powered approach, SentinelOne generated 88% fewer alerts than the median result across all vendors, so it tackled far more incidents autonomously without requiring human intervention.
SentinelOne says some organizations receive over 1,000 security alerts every single day, which is simply too many for human cybersecurity managers to handle -- and every alert they miss could create an unacceptable vulnerability. As a result, the ability to thwart attacks autonomously and reduce alerts will be an increasingly coveted feature for enterprises going forward.
SentinelOne's revenue growth accelerated in the recent quarter
SentinelOne generated a record $225.5 million in revenue during its fiscal 2025 fourth quarter. It was an increase of 29% compared to the year-ago period, and that growth rate marked an acceleration from 28% in the previous quarter, which highlights the company's momentum.
The result was driven by strong growth among SentinelOne's highest-spending customers. More than 14,000 businesses were using SentinelOne at the end of the fourth quarter, and a record 1,411 were spending at least $100,000 per year on its platform. That was a 25% increase compared to the year-ago period, which also represented an acceleration from 24% growth in the third quarter.
SentinelOne's full year revenue for fiscal 2025 came in at a record $821.4 million, which was a 32% jump from fiscal 2024. The result was especially impressive when you consider the company carefully managed its costs throughout the year to improve its bottom line. It still lost $288.4 million on a GAAP (generally accepted accounting principles) basis, but that was a 15% improvement from the $338.7 million net loss it generated in the previous year.
On a non-GAAP basis, which excludes SentinelOne's largest non-cash expense (stock-based compensation), the company actually turned a modest profit of $15.1 million. It was a positive swing from the $81.2 million non-GAAP net loss it generated in the prior year.
Achieving consistent profitability will help SentinelOne build a more sustainable business for the long term, which could translate into steady returns for investors without the extreme volatility its stock experienced after its IPO in 2021.
SentinelOne stock looks like a bargain compared to its peers
SentinelOne's price-to-sales (P/S) ratio exceeded 100 when its stock peaked in 2021. It was not only the most expensive stock in the cybersecurity industry at the time, but it was also one of the most expensive stocks in the entire tech sector.
But the company's strong revenue growth since then, combined with the 75% decline in its stock, places its P/S ratio at a far more reasonable level of 7.1 now. That makes SentinelOne considerably cheaper than many of its peers, including other leaders in AI-powered cybersecurity like CrowdStrike, Palo Alto Networks, and Zscaler:
Moreover, SentinelOne's Q4 revenue growth of 29% was much faster than CrowdStrike's growth of 25% in its recent quarter, Zscaler's growth of 23%, and Palo Alto's growth of 14%. With that said, SentinelOne generates less revenue than each of them, so it's a little easier for it to generate faster growth.
But since investors typically pay higher valuations for companies that are expanding more quickly, it doesn't make much sense for SentinelOne stock to be trading at such a steep discount to its peers -- especially given the size of the opportunity at hand, which is certainly big enough for several providers.
SentinelOne values its addressable market at over $100 billion this year, so it has an enormous runway for growth based on its current revenue. Plus, Cybersecurity Ventures predicts cybercrime will cause $10.5 trillion in damage to the global economy in 2025 alone, so demand for cybersecurity software probably won't be slowing down anytime soon. As a result, I think SentinelOne stock could be a great addition to any portfolio for the long term.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
