Why Shares of Rubrik Stock Rallied This Week
Key Points
Rubrik is a cybersecurity firm that could benefit from AI threats.
The company's revenue is growing at an impressive clip.
Shares look expensive today, but could be good long-term winners.
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Shares of Rubrik (NYSE: RBRK) popped 21% this week, according to data from S&P Global Market Intelligence. The cybersecurity firm is soaring because of the recent scare around artificial intelligence (AI) fueled bot swarms that can target existing digital infrastructure.
Cyber risks are growing, and investors expect this to lead enterprises to spend more on firms like Rubrik. Does that make the stock a buy?
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Cybersecurity AI risks
There has been a massive debate this week over the safety of modern AI tools. Examples have been growing of the ability to use agents and models from the likes of Anthropic and others to target vulnerabilities for hacking.
This has been a boon to cybersecurity stocks like Rubrik. Rubrik is a defense layer that protects your back-up systems, ensuring your data remains secure in the event of an attack. As cyber risks grow, the theory is that more and more organizations will turn to Rubrik to secure their data.
Its business model is to sell subscriptions that grow in price the more data is protected, a great business model because the amount of data held by enterprises is growing every year. Last quarter, Rubrik's annual recurring revenue (ARR) grew 33% year-over-year to $1.66 billion, with gross margins of nearly 80%.
Image source: Getty Images.
Is Rubrik stock a buy?
After going up this week and soaring close to 200% in the last five years, Rubrik stock now looks expensive with a price-to-sales ratio (P/S) of 13.7. However, this booming demand for cybersecurity services may lead to durable revenue growth over the next decade, which could bring down Rubrik's valuation rather quickly.
If you are looking for a cyber stock to bet on, Rubrik could be a good pick for your portfolio.
Should you buy stock in Rubrik right now?
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rubrik. The Motley Fool has a disclosure policy.
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