This Cybersecurity Stock Is Beating the Market in 2025. Is It Still Worth Buying Hand Over Fist?

Core Viewpoint - Despite macroeconomic and geopolitical pressures affecting the technology sector, CrowdStrike has shown strong performance, with a 44% gain in 2025, significantly outperforming the Nasdaq Composite index, which is up roughly 3% [1] Group 1: Company Performance - CrowdStrike's non-GAAP net income for Q1 of fiscal 2026 fell 8% year-over-year to $0.73 per share, impacted by compensation packages offered due to a software outage [4] - Analysts had anticipated a larger decline, forecasting earnings of $0.65 per share, indicating that the actual impact was less severe than expected [5] - The company reported a year-over-year revenue growth of 20%, reaching $1.1 billion [5] Group 2: Future Guidance - CrowdStrike's full-year guidance suggests that its customer choice program (CCP) will negatively affect growth, with adjusted earnings guidance for fiscal 2026 at $3.50 per share, down from $3.93 per share in the previous year [6] - Revenue is expected to increase by nearly 21% in fiscal 2026, slower than the 29% growth recorded last year, with an estimated revenue impact of $10 million to $15 million per quarter from CCP [6] Group 3: Market Opportunities - CrowdStrike anticipates its total addressable market to grow to $250 billion in three years from $116 billion last year, driven by new catalysts such as AI [9] - The revenue from AI tools in cybersecurity is projected to increase over fourfold between 2024 and 2030, potentially generating $134 billion in annual revenue by the end of the decade [10] - Adoption rates of CrowdStrike's modules have improved, with 48% of customers using six or more modules, and 32% using eight or more, both up by four percentage points year-over-year [11] Group 4: Investment Considerations - CrowdStrike's stock has increased by 61% since the software outage incident, leading to a high valuation of 141 times forward earnings, significantly above its five-year average of 106 and the Nasdaq-100 index's multiple of 28 [13] - Given the expensive valuation and expected contraction in earnings for fiscal 2026, it may be prudent for potential investors to wait for a price pullback before considering an investment [14][15]