SentinelOne, Inc. (S): A Bull Case Theory
We came across a bullish thesis on SentinelOne, Inc. (S) on Substack by Matthew | Sycamore Capital. In this article, we will summarize the bulls' thesis on S. SentinelOne, Inc. (S)'s share was trading at $19.35 as of March 27th. S's forward P/E was 102.04 according to Yahoo Finance.
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SentinelOne closed fiscal 2025 with strong financial momentum, showcasing competitive strength and a deepening shift toward AI-driven cybersecurity. Despite an initial 17% stock drop after earnings, the market quickly corrected, but the company remains significantly undervalued relative to its peers. SentinelOne continues to execute on its vision, outpacing legacy competitors and next-gen vendors alike. With revenue reaching $225.5 million in Q4, up 29% year-over-year, and ARR hitting $920.1 million, up 27%, the company is demonstrating solid top-line growth. Importantly, SentinelOne achieved its first-ever quarter of non-GAAP operating income, marking a significant milestone in its path to profitability. With a pristine balance sheet holding $1.1 billion in cash and no debt, the company is well-positioned for future expansion.
CEO Tomer Weingarten credited this success to strong execution, increasing adoption of SentinelOne's AI-powered cybersecurity platform, and growing competitive win rates. The company continues to secure large enterprise deals, including a Fortune 100 airline that switched from a long-time incumbent and next-gen rival to SentinelOne, reinforcing its market leadership. The company's ability to displace established players is evident in its 25% growth in customers with $100K+ ARR, reaching 1,411 enterprise clients. These wins are translating into a larger market share and an expanding footprint, with over 50% of fiscal 2025 bookings coming from non-endpoint solutions such as cloud security, AI-driven analytics, and identity protection.
The growing adoption of AI security solutions has further fueled SentinelOne's expansion. The company is embedding generative AI across its platform, helping land significant deals in AI-centric security. A Fortune 500 retailer quintupled its SentinelOne deployment, signaling growing confidence in its AI-driven approach. Management believes that AI will become a fundamental requirement in cybersecurity, and SentinelOne is using this advantage to drive adoption and secure its position as an industry leader. With over 300 deals in AI-driven security capabilities in Q4 alone, the company is proving that its AI-powered approach is resonating with customers.
The company's platform expansion strategy is paying off, with a 4x increase in customers using four or more SentinelOne modules. This multi-module adoption is driving higher ARR per customer and reinforcing customer retention. SentinelOne's shift beyond endpoint protection to cloud security, identity protection, and AI-driven analytics is positioning it as a comprehensive security platform rather than just an endpoint protection provider. The record backlog of $1.2 billion, up 30% year-over-year, signals strong forward demand and underscores the company's long-term growth trajectory.
Looking ahead, SentinelOne provided a measured fiscal 2026 outlook under new CFO Barbara Larson. The company guided for $1.01 billion in revenue, up 23% year-over-year, and expects operating margins to improve to 3-4%, marking continued profitability expansion. While net new ARR is expected to remain flat due to the retirement of a legacy deception product, management emphasized that without this headwind, ARR growth would be in the mid-to-high single digits. This transition aligns with SentinelOne's strategic focus on AI-native security solutions rather than maintaining legacy products with lower ROI.
Overall, SentinelOne remains an underappreciated growth story. With increasing market share, strong execution, expanding AI-driven offerings, and improving financial performance, the company is on track for significant long-term upside.
SentinelOne, Inc. (S) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held S at the end of the fourth quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of S as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than S but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.
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