It says a lot about CrowdStrike(NASDAQ: CRWD) that its shares have climbed 10% year to date at the time of writing, as an exception to the broader stock market sell-off and the 10% decline in the S&P 500 index.
The cybersecurity giant is capturing strong demand for its artificial intelligence (AI)-powered capabilities, which use advanced machine learning for proactive threat detection and automated response. Impressive operational and financial trends underscore the company's positive outlook.
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Here are four reasons why CrowdStrike is a top AI stock to buy.
1. Disruptive AI-powered cybersecurity innovation
In an increasingly connected world, safeguarding sensitive data and preventing digital threats is more critical than ever. To address these challenges, CrowdStrike stands out with its cloud-based Falcon extended detection and response (XDR) platform, which unifies multiple protection categories -- endpoint, cloud workloads, threat intelligence, identity security, and more -- into a single ecosystem.
Unlike competitors with a narrower approach, such as SentinelOne, or those that rely on legacy on-premises network firewalls like Fortinet, CrowdStrike's Falcon platform takes a more comprehensive view.
By unifying multiple protection categories into a single ecosystem, Falcon reduces operational complexity and provides a more scalable and cost-effective solution. Developed from the ground up with an AI-native architecture, Falcon can learn from vast amounts of data to identify threats with real-time speed and accuracy. Furthermore, CrowdStrike's generative AI assistant, Charlotte AI, enhances the platform by automating incident responses and enabling less technical users to perform complex security tasks.
This deep integration of AI positions CrowdStrike at the forefront of the evolving threat landscape and underscores its industry leadership.
2. Exceptional performance metrics
Market traction from customers' increasing adoption of Falcon's additional product modules has driven business diversification and fueled market share gains, resulting in impressive financial results.
In the recently reported fiscal 2025 fourth quarter, total revenue rose 25% year over year. Several performance indicators suggest even stronger underlying momentum, with total annual recurring revenue (ARR) up 23% to $4.2 billion.
Notably, CrowdStrike is experiencing hyper-growth in categories like next-generation Security Information and Event Management (SIEM), identity security, and cloud security, with combined category ARR increasing 50% from fiscal 2024. A firmwide dollar-based net retention ratio of 112% also underscores the company's growth potential.
Moreover, CrowdStrike is now consistently profitable, with fiscal 2025 adjusted earnings per share (EPS) rising approximately 27% to $3.93. Looking ahead, management expects annual revenue growth of around 21%. They also anticipate improving operating and free cash flow margins in the second half of fiscal 2026.
3. Resilience against trade tariffs
Investors cannot overlook the delicate economic environment amid uncertainties surrounding sweeping changes to U.S. trade policy. However, CrowdStrike's cloud-based, software-as-a-service (SaaS) model sidesteps disruptions from tariffs on imported goods, keeping the company on track to achieve its strategic objectives.
While a broader economic slowdown poses a near-term demand risk, the critical importance of digital protection is likely to keep cybersecurity resilient. This reduces the likelihood of widespread customer subscription cancellations.
With a global customer base and diversified across finance, healthcare, and technology sectors, CrowdStrike is well-positioned to navigate various market cycles.
4. A growth story far from over
CrowdStrike's potential may just be getting started. With an estimated $116 billion total addressable market (TAM) for its AI-native cybersecurity solutions, which is projected to more than double to $250 billion by 2029, CrowdStrike could significantly capitalize on this secular tailwind. By maintaining its current market share, the company could more than double its revenue within the next four to five years, reinforcing its ambitious goal of reaching $10 billion in ARR by fiscal 2031.
This trajectory supports the company's premium valuation, with shares trading at a forward price-to-earnings (P/E) ratio of 105 and a price-to-sales (P/S) ratio of 22. Although CrowdStrike's shares aren't cheap, investors who believe in the company's ability to meet its objectives and consolidate its cybersecurity leadership have compelling reasons to buy and hold the stock for the long term. CrowdStrike remains a great option for diversified portfolios, offering exposure to high-level themes in technology and AI.
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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Fortinet. The Motley Fool has a disclosure policy.
