1 Supercharged Artificial Intelligence (AI) Stock Up 500% in 5 Years to Buy Now, According to Wall Street (Hint: Not Nvidia)
Artificial intelligence (AI) sales across hardware, software, and services are forecast to reach $1.8 trillion by 2030, up from $279 billion in 2024, according to Grand View Research. That translates into annual growth of 37% over the next six years. Opportunities of that magnitude come along about once in a decade.
The last comparable technological transformation was probably the advent of cloud computing. That market is now approaching $1 trillion, and patient investors who bought shares of Amazon, Alphabet, and Microsoft a decade back have beaten the S&P 500 several times over. AI could be just as lucrative, if not more so.
CrowdStrike (NASDAQ: CRWD) lacks the hype surrounding Nvidia, but the company is set to benefit from AI and has already demonstrated its ability to create value for investors. The stock has surged 503% since its public debut in June 2019, and shares more than doubled in the past year alone.
Those returns notwithstanding, 92% of Wall Street analysts who follow CrowdStrike rate the stock as a buy, and the other 8% rate it as a hold. Not a single analyst recommends selling. Here’s what investors should know.
CrowdStrike has a strong presence in several cybersecurity markets
CrowdStrike is a leader in endpoint security software, a vertical concerned with protecting devices like servers and desktops. The company is also gaining share in the endpoint market more quickly than its peers, according to a survey from Morgan Stanley. One benefit of leadership in that particular cybersecurity vertical is that enterprises collect most of their threat intelligence from endpoints, so CrowdStrike has robust data to support its artificial intelligence (AI) models.
CEO George Kurtz says the CrowdStrike Falcon platform has the “most effective and accurate AI models to prevent attacks.” Frost & Sullivan analysts drew a similar conclusion in a report published in 2022: “CrowdStrike leads the industry with regards to the application of artificial intelligence/machine learning to endpoint security.”
Leadership in endpoint security has also helped the company expand into other verticals. CrowdStrike is a recognized leader in cloud security, identity threat detection, risk-based vulnerability management, and managed detection and response services. The company also has one of the fastest-growing security information and event management (SIEM) solutions on the market and recently debuted software products for data protection and IT automation.
Additionally, CrowdStrike is tapping the demand for technology popularized by ChatGPT with its new generative AI assistant, Charlotte AI. The conversational interface helps security teams quickly assess their IT environments, identify threats, and take remedial action. Charlotte AI also recommends ways to proactively reduce risk.
Management says Charlotte AI will address a $7 billion opportunity by 2028. Other companies are building similar conversational assistants, but Morgan Stanley analysts believe CrowdStrike is one of the software vendors “best positioned” to monetize generative AI, due to its scale and unique data.
CrowdStrike is one of the fastest-growing enterprise software companies
CrowdStrike reported fourth-quarter financial results that beat expectations. Revenue increased 33% to $845 million, and non-GAAP net income more than doubled to reach $0.95 per diluted share. The company also reported a gross retention rate of 98%, meaning it kept almost all of its customers.
CrowdStrike guided for first-quarter revenue and non-GAAP net income growth of 31% and 63%, respectively. Management also said full-year revenue and non-GAAP net income could increase as much as 30% and 32%, respectively. That makes CrowdStrike one of only three publicly traded enterprise software companies to guide for 30%-plus revenue growth this year, according to Morgan Stanley.
CrowdStrike shares trade at a reasonable valuation
Cyberattacks are becoming more costly and sophisticated. Cloud migration, software adoption, and the proliferation of connected devices create new vulnerabilities, and annual damages inflicted by cybercrime are projected to increase 44% to $13 trillion by 2028.
Cybersecurity isn’t a discretionary expense but a critical part of the enterprise IT ecosystem. CrowdStrike is well-positioned to capitalize on that opportunity, given its leadership in endpoint security, its growing clout in other cybersecurity verticals, and its lineup of new products, like Charlotte AI.
Wall Street analysts expect CrowdStrike to grow sales at 29% annually over the next five years. That consensus estimate makes its current valuation of 27.9 times sales seem reasonable. Patient investors should consider buying a small position in this growth stock right now.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon, CrowdStrike, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, CrowdStrike, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
1 Supercharged Artificial Intelligence (AI) Stock Up 500% in 5 Years to Buy Now, According to Wall Street (Hint: Not Nvidia) was originally published by The Motley Fool
