Bank of America Says CrowdStrike Earns a ‘Buy' Rating as Recovery Gains Momentum
In this digital age, in which cybersecurity threats are rapidly evolving, companies that provide digital protection are more important than ever. Valued at $89.8 billion, CrowdStrike Holdings (CRWD) is one of today's most well-known cybersecurity companies. While the stock surged 147.2% in 2023, 2024 was a more difficult year, with the stock gaining just 38.6%. A faulty software update in July caused roughly 8.5 million Microsoft Windows systems to crash worldwide. CrowdStrike quickly identified and resolved the issue, and it has implemented recovery measures to regain customer's trust.
Recently, Bank of America Securities analyst Tal Liani reaffirmed CrowdStrike's 'Buy' rating, citing the company's key strategic and financial initiatives aimed at strengthening its market position following the July outage. CRWD stock is up nearly 9% in the year to date, compared to the S&P 500 Index's ($SPX) dip of 2%.
Let's find out if Crowdstrike is a buy now.
Crowdstrike: BofA Analyst Is Impressed With the Recovery Strategy
Following discussions with CrowdStrike's CFO and chief accounting officer, Liani outlined several steps the company has taken to recover from the outage and drive long-term growth. These include the introduction of a Customer Commitment Package and the expansion of Falcon Flex deals, which aim to rebuild customer trust and increase adoption rates. Management expects a rebound in net new annual recurring revenue (nnARR) in the second half of the year, driven by increased demand for Cloud Security and Identity Security. CrowdStrike is well-positioned to capture market share as people increasingly rely on cybersecurity solutions in the face of rising threats.
The analyst noted that one of the most promising indicators of CrowdStrike's future success is the widespread use of Falcon Flex deals. These agreements, which offer customers adaptable, scalable security solutions, have gained significant traction. Notably, 60% of Falcon Flex dollars have already been spent ahead of schedule, indicating strong customer engagement and potential growth at contract renewal. As management emphasized during the Q4 fiscal 2025 earnings call, the total value of Falcon Flex deals reached $2.5 billion, a tenfold increase year-over-year
Beyond its recovery efforts, Liani stated that CrowdStrike is prioritizing innovation and expansion to ensure long-term growth. The introduction of CharlotteAI, along with the company's robust Cloud Security and Identity Security offerings, is expected to play an important role in its growth strategy. According to management, customers have reported a significant reduction in manual workload since using CharlotteAI. Notably, one European financial services firm stated that Charlotte AI summarizes security activity in 10 to 15 seconds, whereas previously it took 20 to 30 minutes. This tangible AI outcome is driving Falcon's adoption as an AI-native security operations center (SOC).
CrowdStrike hopes that by implementing these new platform pillars, it will gain a competitive advantage and strengthen its position in the industry. Liani believes that despite the temporary setbacks, CrowdStrike's proactive approach and strategic investments will drive accelerated growth in the second half of the year. With growing customer adoption of its security solutions and ongoing innovation, the company is well-positioned for long-term success. He has set a price target of $420, implying 13% upside from current levels.
A Strong End to Fiscal 2025
CrowdStrike's recent fourth quarter and fiscal 2025 results indicate that the company is recovering well. In Q4, the company reported a 25% increase in revenue to $1.06 billion, with adjusted earnings per share (EPS) rising 8.4% to $1.03. Both revenue and earnings exceeded analysts' expectations. For the full fiscal year, revenue increased by 29% to $3.95 billion, while EPS increased by 27.1% to $3.93. The company's average recurring revenue (ARR) increased 23% to $4.24 billion. The company generated $1.07 billion in free cash flow. At the end of Q4, the company had $4.3 billion in cash and cash equivalents.
For fiscal 2026, management expects a revenue increase of 18% to 21% in fiscal 2026, while earnings per share may fall by 12% to 15%. Management reaffirmed that the company's AI-powered security solutions will continue to drive growth toward its $10 billion ARR goal by fiscal 2031. Overall, analysts covering CRWD stock expect revenue to grow by 21% in fiscal 2026, while earnings may fall by 12.5%. Analysts predict that revenue will increase by 21.9% in fiscal 2027, followed by an earnings increase of 33.3%. CRWD stock is currently trading at a premium of 105 times forward earnings for 2026.
Is CRWD Stock a Buy Now, According to Wall Street?
Wall Street maintains an average rating of ' Strong Buy ' on CRWD stock. Of the 45 analysts that cover the stock, 32 rate it as a 'Strong Buy,' three as a 'Moderate Buy,' nine as a 'Hold,' and one as a 'Strong Sell.' The analysts' average price target of $407.10 suggests that the stock could rise by up to 9.4% from current levels. The highest target price is $475, implying that the stock could gain 27% over the next 12 months.
The Key Takeaway
CrowdStrike remains a compelling buy for long-term investors willing to take on the short-term volatility. Starting with a small position and adding more shares on pullbacks could be a good strategy.
The global cybersecurity industry is expected to generate $271.9 billion by 2029. CrowdStrike's strong market position, AI-driven security model, and subscription revenue stream make it an appealing growth stock in the cybersecurity industry. However, given the company's high valuation, risk-averse investors may prefer to wait for a better entry point.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Calgary Herald
an hour ago
- Calgary Herald
How a multibillion dollar defence bank could help Canada increase its military spending
Article content The Defence, Security and Resilience Bank would be similar to Export Development Canada, a Crown corporation that provides financial and risk management services to Canadian exporters and investors, 'but way bigger,' Reed said. Article content It would offer large banks such as RBC and BMO credit guarantees 'that would loosen up capital so they could offer lines of credit, trade finance, you name it, but we can grow the industrial base a lot faster,' Reed said. Article content That would, in turn, speed up military procurement, he said. Article content 'It takes nine years to get a jet or seven years to get a shoulder-fired rocket launcher,' Reed said. 'It's because the industrial base just isn't big enough. It's been constrained. So, this would push liquidity into the commercial banks.' Article content Sovereign countries could also 'enhance procurement' by borrowing from the Defence, Security and Resilience Bank on the promise that they 'have to execute within two years,' Reed said. 'We want to foster that rapid-fire procurement that we know has been a problem for all member nations.' Article content Article content Right now, it takes 16 years for startups to go from selling the Department of National Defence on their products to procurement, he said. Article content 'Companies just can't live in that — they call that the Valley of Death,' Reed said. Article content 'That is a problem. If you want to invent a new bullet … in your garage, you're going to wait a long time.' Article content Rob Murray, NATO's inaugural head of innovation and a former U.K. army officer, started writing the blueprint for the bank about five years ago. Article content But, at the time, interest rates were flat, Russia hadn't launched its full-scale war in Ukraine, and U.S. President Donald Trump was not in power. Article content When the Ukraine war began, interest rates started climbing and people started recognizing 'threat levels are changing around the world,' Reed said. Article content Then Trump came to power in his second term and started 'forcing the hand of many NATO nations' to increase their defence spending, Reed said. Article content Article content Murray published his blueprint last December. Article content 'On the back of that he was invited down to brief the president elect down at Mar-a-Lago,' Reed said, 'and Rob's world just started to expand rapidly with proposed member nations seeking him out, asking how would this work? How can we get involved?' Article content Murray asked Reed to step in as the bank's president in early February 'to help stitch together the coalition of governments' needed to bring the idea to fruition. Article content 'Every European nation has been briefed,' Reed said. Article content 'And we did the briefing for Canada right after the election' with senior people in Prime Minister Mark Carney's office, the Privy Council Office, and departments including National Defence, Finance, Global Affairs and Treasury Board. Article content Reed also briefed officials in Singapore last week and plans to do the same in Japan, South Korea, Australia and New Zealand this week. Article content 'We're trying to drive this around a consensus of a dozen anchor nations,' he said. Article content NATO figures from last June suggest Canada spent just 1.37 per cent of its GDP on defence in 2024. The Liberals have said they expect it to reach two per cent by 2030 'at the latest.' Article content But that's not fast enough for Trump, who has complained repeatedly about Canada piggybacking on the U.S. for military protection. Article content 'While I don't like what he's saying, I see this as an opportunity to get ourselves going,' Reed said. 'We have not done our job in a long time. We've not fulfilled our commitments, and this a kick in the pants to say who are we, and what do we stand for?' Article content Later this month, Reed expects NATO countries to accept a new spending minimum of 3.5 per cent of GDP for defence and 1.5 per cent for border security. Article content 'To go from our base today … it's another $100-110 billion a year to ramp up to that,' he said of Canada. 'And that's not in future dollars. That's in last year's dollars. So, any available mechanism that can help grow the industrial base and get them towards those NATO soon-to-be targets is going to be well received.' Article content Article content Founding members of the bank will start meeting in the fall to hammer out details. Reed anticipates standing up the bank next year. Article content 'I like the idea of another mechanism, and a very powerful and large one, and I think a very influential one, that can help us do more in the defence and security domain in Western democracies,' said retired general Rick Hillier, Canada's former top soldier, who has joined the Defence, Security and Resilience Bank's board of directors. Article content He predicts Canada is going to need 'a revolution in defence and security procurement' to solve the Canadian Forces' equipment woes. Article content More money could accelerate the acquisition of new aircraft, warships and submarines, he said. Article content 'The component I'm most worried about is the army,' Hillier said. 'The army is broken. We're down people. Our bases and our infrastructure are in very sad condition. And we lack every kind of capability that a force needs in the kind of areas where we would find ourselves fighting right now. If things go south in Eastern Europe and (Vladimir) Putin and Russia get into some kind of thing they can't extract themselves from and start heading into Lithuania and Latvia, where there are several thousand Canadians, our sons and daughters, we are ill-prepared to insure that they're ready to look after themselves.' Article content Article content The army lacks self-propelled artillery pieces, air defence systems, technology that can detect, track, and neutralize drones, and equipment to remove minefields, Hillier said. 'We need to focus a huge amount of that defence spend on the army.' Article content Canada has also been lagging in spending to defend our north, he said. 'We've got to know what's going on in the Arctic, to be able to see what's going on specifically, to be able to communicate what's going on and then to be able to respond to what's going, whether its air, land, or depending on the time of year, sea forces. Right now, we can only do a very small part of that.' Article content The country needs satellites and ultra-long endurance drones to cover the north, Hillier said. Bases should be built in Inuvik, Rankin Inlet, and Iqaluit, he said. 'Then you have to connect … those spots by upgrading the airfields across the north.'
Globe and Mail
3 hours ago
- Globe and Mail
2 Artificial Intelligence (AI) Stocks to Buy Before They Soar to $3 Trillion, According to Certain Wall Street Analysts
Shares of Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) have fallen a few percentage points year to date despite a 2% return in the benchmark S&P 500 (SNPINDEX: ^GSPC). But certain Wall Street analysts anticipate substantial gains in those stocks in the next 12 months, as detailed below: Ivan Feinseth at Tigress Financial has set Amazon with a target price of $305 per share. That implies 44% upside from its current share price of $212. It also implies a market value of $3.2 trillion. Paul Chew at Phillip Securities has set Alphabet with a target price of $250 per share. That implies 45% upside from its current share price of $172. It also implies a market value of $3 trillion. Here's what investors should know about Amazon and Alphabet. Amazon: 44% implied upside The investment thesis for Amazon centers on its strong position in three growing markets. It runs the most popular online marketplace outside of China, powering nearly 41% of retail e-commerce sales in the United States. Amazon is also the largest retail media company, collecting nearly 77% of domestic-retail ad spending and 40% of global-retail ad spending. Finally, Amazon Web Services (AWS) is the largest public cloud, holding 29% market share in infrastructure and platform services. With more customers and partners than any other cloud platform, AWS is particularly well positioned to capitalize on growing demand for artificial intelligence (AI) infrastructure. The company has leaned into that opportunity by developing custom chips for training and inference. Importantly, Amazon is also using AI across its retail business to improve productivity and efficiency. CEO Andy Jassy says the company is developing about 1,000 generative AI tools to make warehouse robots smarter, improve inventory allocation, and optimize delivery routes. Those innovations, coupled with the ongoing restructuring of its logistics network, should improve retail margins in the coming years. As a caveat, Amazon may struggle with tariffs. Morgan Stanley estimates 60% of sellers on the marketplace have some exposure to China, and Chinese sellers represent an important source of advertising revenue. Nevertheless, Andy Jassy believes its diversified seller base will let the company "weather challenging conditions better than others." Wall Street expects Amazon's earnings to increase at 10% annually through 2026. That makes the current valuation of 34 times earnings look expensive. But analysts have often missed the mark in the past. Amazon beat the consensus earnings estimate by an average of 21% in the last six quarters. Assuming that trend continues, the current stock price is quite reasonable. Here's the takeaway: I'm not convinced Amazon stock will return 44% in the next year, but I still think patient investors should own a position, and now is a reasonable time to buy a few shares. Alphabet: 45% implied upside The investment thesis for Alphabet centers on large opportunities in digital advertising and cloud services. Namely, Alphabet is the largest ad tech company on the planet, and digital ad spending is forecast to grow at 15% annually through 2030. While Alphabet has been losing market share for years, it still has a profound ability to engage internet users with platforms like Chrome, Google Search, and YouTube. Also, while internet search is undoubtedly moving toward AI tools like ChatGPT and Perplexity, Alphabet is successfully leaning into that trend. Generative AI overviews in Google Search are driving higher usage and satisfaction. And its generative AI application Gemini was the second-most downloaded AI chatbot behind ChatGPT last year, according to Sensor Tower. Google is the third-largest public cloud. It accounted for 12% of infrastructure and platform-services spending in the first quarter, up a percentage point from the prior year. Meanwhile, Amazon and Microsoft lost share. Google may continue to outpace its peers due to strength in large language models and AI infrastructure, two categories where Forrester Research has recognized the company as a leader. Importantly, Alphabet has a third major opportunity in autonomous driving technology. That industry is far less developed than digital advertising and cloud computing, but the global autonomous ride-sharing market could top $2 trillion over the next decade, according to Evercore. Alphabet's Waymo is an early leader. It currently provides 250,000 driverless rides per week across four U.S. cities, up fivefold from last year. As a caveat, Alphabet faces a possible breakup depending on the outcome of two antitrust lawsuits that have progressed to the remediation phase. A federal judge will propose fixes for its illegal internet search monopoly in August, and another federal judge will rule on its ad tech monopoly at a future date. Most analysts think the probability of a forced breakup is slim, but the odds are not zero. With that in mind, Wall Street estimates Alphabet's adjusted earnings will increase at 7% annually through 2026. That makes the current valuation of 19 times sales look somewhat expensive. But Alphabet beat the consensus estimate by an average of 14% during the last six quarters. The current valuation would be reasonable if that trend continues. Here's the takeaway: Alphabet stock could return 45% in the next year if the judges issue favorable rulings in the antitrust cases. But the stock could also decline sharply if either judge orders a breakup. Investors can buy a small position today, but I would wait for more clarity before taking a large stake. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 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. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.
Globe and Mail
3 hours ago
- Globe and Mail
Will $50,000 Invested in Nvidia Stock Be Worth $1 Million in 10 Years?
Nvidia (NASDAQ: NVDA) has been a cornerstone of the artificial intelligence (AI) trade for several years. Its share price has increased 850% since January 2023, a period that roughly coincides with the launch of ChatGPT. But Wall Street is still overwhelmingly bullish on the semiconductor company. Angelo Zino at CFRA Research thinks Nvidia "will be the most important company to our civilization over the next decade." More broadly, among 73 analysts following Nvidia, the median 12-month target price is $175 per share. That implies 25% upside from its current share price of $140. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Could Nvidia stock turn $50,000 into $1 million over the next decade? Here are my thoughts. The investment thesis for Nvidia is bigger than AI chips What sets Nvidia apart is vertical integration. The company has over 90% market share in data center graphics processing units (GPUs), chips that accelerate complex workloads such as artificial intelligence (AI). But the company supplements its GPUs with adjacent hardware like CPUs, interconnects, and networking equipment. Nvidia also develops software products. AI Enterprise is a suite of tools, code libraries, and pretrained models that streamline the development of AI applications for use cases like autonomous robots, conversational agents, and optimization systems. CrowdStrike uses those tools to power threat detection capabilities on its cybersecurity platform. Similarly, Omniverse is a software platform that supports 3D application development. It also serves as a simulation engine that lets engineers generate synthetic data for developing machine learning models. Amazon uses the Omniverse platform to optimize warehouse design and train fulfillment center robots. Nvidia frequently sets performance records at the MLPerf benchmarks, objective tests that evaluate AI systems on training and inference workloads. That is an important competitive advantage: Nvidia builds the best AI accelerators on the market. But vertical integration reinforces that advantage by letting the company design entire data center systems with the "lowest total cost of ownership," according to CEO Jensen Huang. Grand View Research says spending on AI hardware, software, and services will increase at 35.9% annually through 2030. Nvidia has a good shot at matching that growth rate. Indeed, Wall Street expects earnings to grow at 40% annually through the fiscal year ending January 2027. That makes the current valuation of 44 times earnings seem fair. Nvidia is unlikely to turn $50,000 into $1 million over the next decade Nvidia shares would need to increase 1,900% (20-fold) in the next decade to turn $50,000 into $1 million. Returns of that magnitude are theoretically possible in that time frame. In fact, seven stocks currently in S&P 500 (SNPINDEX: ^GSPC) hit that mark in the last decade, as listed: However, while 20-fold returns are theoretically possible, Nvidia has virtually no chance of hitting that mark in the next decade. The company is already worth $3.4 trillion, meaning its market value would hit $68 trillion if the stock increased 20 times. That seems highly unlikely when the entire S&P 500 is only worth $48 trillion today. Nevertheless, Nvidia is still a worthwhile investment. AI will likely be the most transformative technology in history, and the company is well positioned to benefit as demand for AI infrastructure increases. Potential catalysts include generative AI, autonomous vehicles, and humanoid robots. Also, Nvidia has a burgeoning software business that may evolve into a significant source of revenue as those catalysts take shape. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor 's total average return is997% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 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, Arista Networks, Axon Enterprise, CrowdStrike, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Arista Networks, Axon Enterprise, CrowdStrike, Nvidia, and Tesla. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy.
