After struggling over the past week, large artificial intelligence stocks are in the green today, ahead of Nvidia's earnings report, which is due out after the market closes. Given the importance of Nvidia to the entire AI trade, the company's earnings results, guidance, and comments on broader AI trends have the potential to influence the entire sector and perhaps the broader market as well.Shares of Meta Platforms (META 2.58%) traded 3.5% higher as of 12:52 p.m. ET today. Shares of CrowdStrike (CRWD 4.32% ...

CrowdStrike (CRWD) is scheduled to report its fourth-quarter fiscal 2025 results on March 4, 2025.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.CrowdStrike anticipates revenues between $1.0287 billion and $1.0354 billion for fourth-quarter fiscal 2025. The Zacks Consensus Estimate for CRWD’s fiscal fourth-quarter revenues is pegged at $1.03 billion, indicating year-over-year growth of 22.28%.For the fiscal fourth quarter, the company expects non-GAAP earnings per share in the band ...

Last year was tumultuous for CrowdStrike Holdings (CRWD -3.06%). On July 19, it released a corrupted update to its industry-leading cybersecurity software that crashed more than 8.5 million of its customers' computers around the world. CrowdStrike stock plummeted by 42% following the outage, as investors feared it would trigger a customer exodus and a sharp drop in revenue.However, the stock has since soared to a record high, as it appears the company's cybersecurity platform is so good that not even the in ...

Company Performance - Shares of software companies CrowdStrike, MongoDB, and Cloudflare experienced significant declines, with CrowdStrike down 3.4%, MongoDB down 2.5%, and Cloudflare down 2.3% as of 1:45 p.m. ET [1] - MongoDB made a $220 million acquisition, but the overall decline in these high-quality software stocks is attributed to negative macroeconomic news [2] Economic Indicators - The Conference Board's February Consumer Confidence survey revealed a significant drop in the overall index by 7 points to 98.3, marking the largest decline since August 2021 [3] - The Expectations Index fell by 9.3 percentage points to 72.9, indicating potential recession signals as readings below 80 typically suggest an economic downturn [3] - Inflation expectations for the next 12 months increased from 5.2% to 6%, influenced by political rhetoric surrounding tariffs [4] Stagflation Concerns - The combination of recessionary sentiment and rising inflation raises concerns about a stagflationary environment, which could adversely affect all stocks, particularly high-multiple growth stocks in the software sector [5][6] - High inflation would increase the discount rate for valuing stocks, disproportionately lowering the present value of future earnings, which is critical for high-multiple stocks like those in the software industry [10] Company-Specific Insights - CrowdStrike is recognized as a leader in cybersecurity with an AI-powered platform, recovering from a previous outage that was not due to a breach [7] - MongoDB is expected to gain market share in the database industry as AI applications become more prevalent, despite recent slowing growth [8] - Cloudflare has integrated AI inferencing into its services, enhancing its competitive edge in website content delivery and security [9]

Group 1 - CrowdStrike (NASDAQ: CRWD) is set to report Q4'25 earnings on March 4, 2025, after market close [1] - Analysts have modestly negative expectations for the upcoming earnings report, with EPS estimates being revised up 7 times and down 21 times in the last period [1] - Michael Del Monte, a buy-side equity analyst, has over 5 years of industry experience and takes a macro-value-oriented approach to investment analysis [1]

Core Viewpoint - CrowdStrike's stock experienced a significant decline due to macroeconomic concerns and an investigation by the DOJ and SEC regarding its deal with Carahsoft [1][2][5] Group 1: Stock Performance - CrowdStrike's share price fell by 6.8% in a trading session where the S&P 500 and Nasdaq Composite indices dropped by 1.8% and 2.2%, respectively [1] - The stock's valuation retreated amid bearish macroeconomic indicators affecting growth stocks [2] Group 2: Macroeconomic Indicators - Existing home sales for January decreased to 4.08 million units, and the University of Michigan's Consumer Sentiment index fell to 64.7%, marking a 10% sequential decline [3] - S&P Global reported a manufacturing PMI score of 51.6 for February, below the expected 52.8, while the services PMI unexpectedly declined to 49.7, significantly underperforming the forecast [4] Group 3: Investigation Impact - The DOJ and SEC are investigating CrowdStrike's $32 million deal with Carahsoft to provide cybersecurity services to the IRS, contributing to investor concerns [5] - There are risks that the ongoing investigations could negatively impact previously booked or anticipated sales for CrowdStrike [5]

Industry Overview - Cybersecurity encompasses comprehensive security measures designed to protect systems, networks, and programs from digital attacks, which often aim to access, alter, or destroy sensitive information, extort money, or disrupt business operations [1] - The widespread adoption of artificial intelligence (AI), Internet-of-Things (IoT) devices, and increased digitization has heightened vulnerabilities, necessitating advanced security solutions [2] - The global cybersecurity market size is currently estimated to be around $190 - $210 billion, with projections to reach $300 - $375 billion by 2028-2030 [6] Growth Potential - The cybersecurity market has excellent growth opportunities due to rising demand for integrated protection against evolving security threats and the increasing incidence of cyberattacks [4] - Companies in the cybersecurity space are focusing on simplifying IT security infrastructure while providing robust defenses against cyberattacks [5] Stock Recommendations - Four stocks from the cybersecurity sector are recommended for strong potential double-digit returns in the short term: CrowdStrike Holdings Inc. (CRWD), CyberArk Software Ltd. (CYBR), Palantir Technologies Inc. (PLTR), and Fortinet Inc. (FTNT) [3][7] Company Insights CrowdStrike Holdings Inc. (CRWD) - CRWD is benefiting from rising demand for cybersecurity solutions and secure networking products amid the growing hybrid working trend [9] - The Falcon platform has expanded to over 28 modules, enhancing CRWD's competitive edge and diversifying revenue streams [12] - Expected revenue and earnings growth rates for CRWD are 20.2% and 16.6%, respectively, for the current year [14] CyberArk Software Ltd. (CYBR) - CYBR is experiencing growth due to rising demand for cybersecurity and privileged access security solutions, particularly in sectors like banking and healthcare [15] - The company is shifting towards software-as-a-service and subscription-based solutions, driving top-line growth [15] - Expected revenue and earnings growth rates for CYBR are 31.5% and 18.2%, respectively, for the current year [18] Palantir Technologies Inc. (PLTR) - PLTR reported robust earnings results for Q4 2024, exceeding estimates and providing solid guidance for 2025 [19] - The launch of its AI-powered platform has accelerated growth in its commercial business, reducing dependency on government contracts [20][22] - Expected revenue and earnings growth rates for PLTR are 31.4% and 31.7%, respectively, for the current year [22] Fortinet Inc. (FTNT) - FTNT's results reflect strong demand from large enterprise customers and growth in security subscriptions, despite challenges in networking products [23] - The adoption of Software-Defined Wide Area Network (SD-WAN) solutions is anticipated to be a key growth driver, with the market projected to grow from $3.4 billion in 2022 to $13.7 billion by 2027 [24] - Expected revenue and earnings growth rates for FTNT are 13.5% and 2.5%, respectively, for the current year [26]

Group 1: AI and Cybersecurity Landscape - The rise of artificial intelligence (AI) and cloud computing has transformed business operations and increased cybersecurity risks, making AI-driven security solutions essential for protecting sensitive data and preventing breaches [1] - AI-powered cybersecurity is a key long-term investment theme, creating growth opportunities for leading companies like CrowdStrike and Cloudflare [1] Group 2: Cloud AI Definition - Cloud AI refers to AI tools and services that operate on cloud computing platforms such as Google Cloud, Amazon Web Services (AWS), and Microsoft Azure, allowing businesses to utilize AI for data analysis and security decision-making without local software installation [2] Group 3: AI's Impact on Cybersecurity - Traditional cybersecurity tools depend on rules and signatures for threat detection, requiring regular updates, while AI-powered cybersecurity adapts to new threats autonomously [3] - AI enables real-time threat detection, automated incident response, and high-accuracy fraud prevention, including defense against zero-day attacks [4] Group 4: Investment Opportunities - Investors are encouraged to consider CrowdStrike and Cloudflare as key AI cybersecurity stocks for their portfolios [5] Group 5: Company Profiles - CrowdStrike's AI-native cybersecurity platform, Falcon, integrates AI-driven threat intelligence and identity protection, positioning the company as a leader in modern cybersecurity transformation [6] - Cloudflare utilizes AI-driven security to protect enterprises from cyber threats, enhancing DDoS attack mitigation and Zero Trust architecture, indicating strong long-term growth potential [7]

Core Insights - Cybersecurity is an important investment theme, although not as prominent as AI or quantum computing, due to the increasing efforts of cybercriminals [1] - CrowdStrike and Palo Alto Networks are leading providers in the cybersecurity software market, particularly in endpoint protection [2][3] Company Comparisons - Both CrowdStrike and Palo Alto Networks offer a wide range of products and employ similar business models, making it difficult to determine a clear winner [6] - CrowdStrike has a competitive edge in endpoint protection, as indicated by Gartner's Magic Quadrant rankings, which show it leading over Palo Alto and other competitors [3] - CrowdStrike's platform is cloud-native and utilizes AI, with nearly 30 additional cybersecurity modules available, leading to high client engagement [4] - Palo Alto Networks is transitioning to a cloud-based AI model but started with a focus on firewalls, and its offerings are not as comprehensive as CrowdStrike's [5] Revenue Growth - CrowdStrike reported total revenue of $1 billion, a 29% year-over-year increase, with an annual recurring revenue (ARR) of $4.02 billion, up 27% year-over-year [7] - Palo Alto Networks' next-gen platform ARR grew 40% year-over-year to $4.5 billion, but overall revenue growth was only 14% year-over-year to $2.1 billion due to its legacy business [8][9] Profitability - Palo Alto Networks is currently more profitable due to its mature business model, while CrowdStrike is still working towards profitability [10][11] - CrowdStrike has potential for improvement in profitability, but Palo Alto Networks is the clear winner in this category [11] Valuation - Palo Alto Networks is significantly cheaper, trading at about half the valuation of CrowdStrike, despite having better free cash flow margins [12][13] - CrowdStrike's free cash flow margin is 29%, while Palo Alto's is 37%, indicating a more favorable valuation for Palo Alto [13] Overall Conclusion - Palo Alto Networks edges out CrowdStrike with two wins and two ties in various categories, but CrowdStrike's best-in-class offering and growth potential should also be considered [14]

Group 1 - CrowdStrike has demonstrated resilience following an outage, indicating strong operational stability [1] - The company exhibits high switching costs and product quality, making it a competitive player in the market [1] - When comparing free cash flow generation, CrowdStrike is considered to be of higher quality than Palo Alto [1]