CrowdStrike is a buy, just not yet. Here’s why
CrowdStrike reported better-than-expected quarterly results and better-than-expected forward guidance Wednesday evening but saw near-record share sales. Hot money undoubtedly booked profits as it sought a Hewlett Packard Enterprise or Dell-type post-earnings earnings boost, and the shares fell more than 11% to about $664 apiece. Let them sell. We are not short-term thinkers. According to LSEG, CrowdStrike’s revenue in the first quarter of fiscal 2027 rose 26% year over year to $1.39 billion, beating the 1.36 billion consensus estimate. Adjusted earnings per share (EPS) rose 51% to $1.10 in the quarter ended April 30, according to LSEG data. This figure was above the estimate of $ 1.07. CRWD YTD mountain CrowdStrike YTD CrowdStrike, at the peak of the hit and rise, announced a 4-for-1 stock split that is expected to begin trading on a split-adjusted basis on July 2. While we raise our price target to $750 per share from $650, we maintain our hold-equivalent 2 rating to give the stock time to settle before considering calling it a buy. CrowdStrike shares closed at a record high of $782 on Monday. Ultimately, putting aside the short-sighted stock reaction we also saw after Palo Alto Networks earnings on Tuesday evening, CrowdStrike’s strong report adds to the evidence that AI adoption is not a threat, but rather a boon for the cybersecurity industry. The idea that enterprise companies around the world would put their data at risk by trying to keep their cybersecurity solutions afloat by leveraging an AI model is proving to be delusional. As Jim Cramer has been saying all along, the concerns that slashed 30% of cyber stocks earlier this year couldn’t be more wrong. CEO George Kurtz called Mythos a “watershed moment” and said on the post-earnings call that the powerful, yet-to-be-released Anthropic model highlights “the importance of defenders being able to detect vulnerabilities much faster than ever before, including chaining multiple vulnerabilities to create lethal cyberattacks.” Rather than launch Mythos, which proved adept at detecting vulnerabilities in tests, Anthropic initially made the model available to 11 organizations, including the CrowdStrike and Palo Alto Networks Club names. The initiative, called Project Glasswing, provides assistance in securing the Mythos. On Tuesday, Anthropic expanded its efforts to include 150 organizations in more than 15 countries. Kurtz said artificial intelligence is increasing the demand for security solutions in two ways. The first, and most obvious, is that customers need to ensure the security of AI before deploying it. Companies are unable to delegate important access codes to unsecured AI agents, making cyber a key component of the AI infrastructure. Second, AI has led to “an explosion of greenfield attack surfaces, each of which requires cybersecurity,” the CEO said. In cyber-speak, greenfield attack surfaces are potential vulnerabilities that arise from the deployment of brand new technology. Kurtz said that in light of all the data centers in the process of being built, every player in the supply chain is experiencing hyper growth and therefore demand for security. “For the first time in my career, the market’s perspective on the role of cybersecurity has shifted from being viewed primarily through the lens of risk management, compliance and protection to being recognized as a strategic accelerator and critical enabler of AI adoption.” In other words, hyperscalers and neoclouds can order all the hardware they want (or can afford), but it’s the CrowdStrikes and Palo Alto Networks of the world that will enable organizations to safely adopt and scale AI solutions. Asked about CrowdStrike’s conversations with customers in recent months, Kurtz said: “The big thing for me was that when I asked what outcome the customer was looking for, it wasn’t a technology outcome per se. We needed to solve the security problem because we want to deploy AI faster. We want to move faster in our business. Our CEO is demanding the adoption of AI. We can’t do that securely.” Although the lack of memory is a bottleneck in the creation of AI infrastructure, cybersecurity appears to be the gateway to AI deployment. Why we have this Cybersecurity is a must for companies in the digital age. Led by co-founder and CEO George Kurtz, CrowdStrike is among the best, along with Club member Palo Alto Networks. The company specializes in endpoint protection through its AI-based platform called Falcon. Competitors: Palo Alto Networks, Fortinet, SentinelOne, Microsoft Portfolio weight: 2.57% Last purchase: March 24, 2026 Start date: October 16, 2024 Regarding stock splits, we view it as a positive when the price of a single share starts to become a deterrent, as is the case with CrowdStrike. This is because investors don’t like the idea of fractional share ownership, so lowering the share price makes the stock more accessible. Of course, stock splits don’t create more value for investors, who wake up with a quarter of the initial cost per share for four times the number of shares in their portfolio. We covered this topic in a bit more detail about two years ago when Nvidia split its shares on a 10-for-1 basis. The guidance raised CrowdStrike management’s outlook for full fiscal 2027. Note that the earnings guide does not take into account the yet-announced spin-off. According to LSEG, total revenue is expected to be between $5.91 billion and $5.96 billion, down from the previous range of $5.87 billion to $5.93 billion, and above expectations of $5.89 billion. Adjusted EPS is estimated to be between $4.88 and $4.96, down from the previously provided range of $4.78 to $4.90, also above the $4.86 consensus estimate compiled by LSEG. According to FactSet, Annual Recurring Revenue (ARR) is expected to end the year between $6.53 billion and $6.56 billion, down from the previous estimate of between $6.47 billion and $6.52 billion; This is again above the expected $6.5 billion. CrowdStrike also issued a strong outlook for the second quarter of fiscal 2027. Total revenue is expected to be between $1.44 billion and $1.44 billion, according to LSEG, above expectations of $1.43 billion. Adjusted EPS is expected to be between $1.16 and $1.17, in line with estimates compiled by LSEG. According to FactSet, ARR is expected to be between $5.79 billion and $5.8 billion; This is again above the expected $5.77 billion. (Jim Cramer’s Charitable Trust is long CRWD, PANW. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
