Investors can look beyond Nvidia to find artificial intelligence (AI) opportunities thanks to the industry’s rapid expansion.
Nvidia stock has soared 715% since the beginning of 2023, making it very hard to ignore. The company has added $2.5 trillion to its valuation in that time, thanks entirely to red-hot demand for its data center chips designed for processing artificial intelligence (AI) workloads.
But the AI industry is expanding quickly, and investors have a growing number of opportunities to consider. CrowdStrike (CRWD 2.54%), for example, is a leader in AI-based cybersecurity, and its products have become an essential part of the software stack for businesses of all sizes.
Nvidia bears are a rare breed on Wall Street, but so are CrowdStrike bears right now. Here’s why it could be a great addition to any stock portfolio — even one that already includes Nvidia.
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CrowdStrike’s strategy is resonating with customers
The enterprise cybersecurity industry has a history of fragmentation. Different vendors often specialized in different areas — some excelled at cloud security, while others developed best-in-class identity security — so businesses had to piece products together from multiple providers. However, the industry is shifting, and cybersecurity vendors who can cover all bases with one platform are winning big.
That has been CrowdStrike’s strategy from the start. Its Falcon platform is a lightweight solution with 28 modules available to customers that cover cloud security, identity security, endpoint protection, exposure management, and more.
During the fiscal 2025 first quarter (ended April 30), CrowdStrike said 65% of its customers were using five or more modules. Plus, the number of customers who adopted eight modules soared by a whopping 95% compared to the year-ago period. It’s a clear sign organizations are rushing to consolidate their cybersecurity needs onto one platform.
It’s no surprise, considering a recent study by International Data Corporation (and sponsored by CrowdStrike) found that companies save $6 for every $1 they invest in the company’s platform. Additionally, CrowdStrike claims it can make security teams twice as effective with incident investigations concluding 66% faster than with a fragmented cybersecurity stack.
AI is the secret sauce behind CrowdStrike’s speed and effectiveness. Automation is key to dealing with modern-day threats, which continue to grow in both frequency and sophistication. Data is the lifeblood of AI, and CrowdStrike’s models are trained on more than 2 trillion security events each day, which means they become faster and more accurate over time.
CrowdStrike beat revenue and earnings expectations in Q1
CrowdStrike generated $921 million in revenue during the fiscal first quarter, up 33% year over year and also comfortably above management’s forecast of $904 million.
But the company’s bottom-line results were even more impressive. It delivered its fifth-consecutive quarter of generally accepted accounting principles (GAAP) profitability with $42.8 million in net income. This came on the back of careful cost management with operating expenses rising only 27% year over year, allowing more money to flow to the bottom line.
On a non-GAAP basis, which strips out one-off and noncash expenses like stock-based compensation, CrowdStrike delivered $231.7 million in net income, which was a whopping 70% increase from the year-ago period. It translated to $0.93 in non-GAAP earnings per share, which was also better than management’s guidance of $0.90.
Simply put, CrowdStrike has converted its leadership position in AI and its soaring revenue growth into an increasingly profitable business, which is something many of its peers have been unable to achieve so far.
Wall Street is very bullish on CrowdStrike stock
The Wall Street Journal tracks 49 analysts covering CrowdStrike stock, and 38 (78%) of them have given it the highest-possible buy rating. A further seven are in the overweight (bullish) camp, and the remaining four recommend holding. No analysts recommend selling.
Their average price target (which typically covers the next 12 to 18 months) for CrowdStrike stock is $397.68, which implies upside of 17% from where it trades as of this writing. However, the stock could crush the Street’s estimate long term.
CrowdStrike ended Q1 with $3.6 billion in annual recurring revenue, but it believes it can nearly triple that figure over the next five to seven years to reach $10 billion. Customers’ preference for a unified platform will be instrumental to hitting that milestone, and CrowdStrike is already proving it can save them money while delivering the most advanced AI-powered protection.
CrowdStrike is a best-in-class cybersecurity provider, and it can be a best-in-class cybersecurity and AI stock for any portfolio.