CrowdStrike is the IBD Stock Of The Day as the cybersecurity stock is coming off strong earnings and an analyst day where it raised some of its fiscal targets. CRWD stock is pulling back but could be actionable if it reverses higher to retake its 21-day line.
The cybersecurity company is seen by many analysts as a likely winner in the growing adoption of generative artificial intelligence. The company recently updated analysts on its latest AI products.
On the stock market today, CrowdStrike stock gained 0.76% to close at 165.29. CRWD stock had gained 55.8% on the year entering trading Thursday.
CrowdStrike is on the IBD Tech Leaders list. Further, it is the top-ranked stock in the IBD Computer-Security group, which itself ranks a strong 39 out of 197 industry groups IBD tracks.
CRWD Stock: Generative AI Push
Founded in 2011, Sunnyvale, Calif.-based CrowdStrike is focused on detecting and preventing cybersecurity threats for the cloud-computing era. The company went public in 2019. Meanwhile, it has steadily expanded its threat-detection and protection capabilities.
Much of that work is powered by AI. CrowdStrike uses machine learning and a specialized database to detect malware on laptops, mobile phones and other devices that access corporate networks.
Now, the company is pushing further into generative AI.
Launching Charlotte AI
At its Fal.Con customer conference in Las Vegas on Sept. 21, CrowdStrike said it aims to reach $10 billion in annual recurring revenue, or ARR, in 5 to 7 years, up from $2.9 billion this year. It also updated analysts on the rollout of Charlotte AI, the generative AI-powered cybersecurity platform it first announced this spring.
"Similar to other generative AI overlays, Charlotte AI enables natural language querying for security operations tasks like threat hunting, remediation, and threat reports," Wedbush analyst Taz Koujalgi wrote in a client note after the conference. "Benefits include faster remediation times, fewer man hours, and potentially less staffing required for Security Ops roles."
Goldman Sachs analyst Gabriela Borges maintained a buy rating and raised her price target for CRWD stock to 195 from 175 following the conference.
"CrowdStrike continues to build out one of the more complete cloud security portfolios vs. peers," the report said. "This includes Cloud Workload Protection (agent-based technology for monitoring container activity), Cloud Security Posture Management (for checking cloud environments to make sure they're configured correctly)."
On Oct. 2, a Morgan Stanley report identified CrowdStrike as a likely beneficiary of generative artificial intelligence. Further, the report said CrowdStrike "has quickly risen to market leadership as a next-gen SaaS (software as a service) security platform. Continued share gain in the core endpoint market, in addition to growing uptake of emerging modules (such as identity protection and cloud workload protection) and favorable AI positioning should help to sustain 20%+ topline longer term."
Earnings Beat For Q2
CRWD stock picked up strength following an earnings beat for CrowdStrike at the end of August.
Second-quarter earnings for CrowdStrike jumped 105% to 74 cents a share on an adjusted basis. Revenue climbed 37% to $731.6 million. Analysts polled by FactSet had projected earnings of 56 cents a share on revenue of $724 million for the period ended July 31.
CrowdStrike's ARR increased 37% to $2.93 billion. Analysts had predicted ARR of $2.92 billion.
For its fiscal third-quarter ending in October, analysts expect CrowdStrike to post an 85% earnings increase to 74 cents a share on an adjusted basis. Revenue could climb 34% to $777 million, according to the projections.
And for the full-year, analysts project CrowdStrike's earnings will jump 84% to $2.82 a share on an adjusted basis.
CRWD Stock Technical Ratings
Meanwhile, the strong earnings performance has allowed CRWD stock to gain strength. CRWD shares boast a perfect IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one. The best growth stocks have a Composite Rating of 90 or better.
Also notable is that CrowdStrike is the top-rated stock in IBD's Computer-Security industry group.
Further, CRWD stock's Relative Strength Rating is 93 out a best-possible 99. The rating measures how a stock's price movement over the last 52 weeks compares with that of other stocks in IBD's database.
