CrowdStrike Is Still Best-in-Breed—But 2026 May Be a Tough Trade

Core Viewpoint - CrowdStrike Holdings Inc. has shown strong performance in 2025 with a stock increase of 39%, outperforming the broader market, but has faced a recent decline of 6.6% in the last month despite a strong earnings report [2][3] Financial Performance - Revenue for the most recent quarter rose 21% year-over-year to $1.23 billion, while annual recurring revenue (ARR) grew in the low 30% range, driven by multi-module adoption across the Falcon platform [4] - Adjusted operating margins have improved to the mid-20% range, indicating increased operational efficiency as free cash flow scales with workload consolidation on Falcon [6] Growth Outlook - CrowdStrike is recognized as a "best in breed" stock in cybersecurity, with a significant stock increase of 115% since overcoming a software glitch in July 2024 [3] - The company is transitioning from a hypergrowth phase to a "scale and optimize" era, which could benefit long-term investors if valuation compresses or earnings align with stock price [7] Valuation Concerns - CrowdStrike currently trades at approximately 30 times sales, which is typical for top-tier cybersecurity stocks but leaves little margin for error [3] - Future growth rates are expected to be more measured, with current metrics not matching the previous 40-60% growth rates that supported higher valuations [5]