The Smartest Growth Stock to Buy With $20 Right Now

Key Points

• SentinelOne stock has been under pressure, but its latest results could pave the way for strong results.

• The company has raised its guidance thanks to the rapid adoption of its AI-focused cybersecurity tools.

• It's on track to grow earnings at an incredible pace, giving investors a solid reason to buy this stock.

• 10 stocks we like better than SentinelOne ›

Cybersecurity specialist SentinelOne (NYSE: S) has underperformed the broader market so far this year thanks to a string of underwhelming quarterly results, but its fortunes are likely to turn around following its latest earnings report.

SentinelOne released results for its fiscal 2026 second-quarter (ended July 31) on Aug. 28. The stock shot up more than 7% the following day thanks to stronger-than-expected numbers and upgraded guidance. SentinelOne stock is trading at just under $20 following its latest jump. However, it won't be surprising to see it head higher in the future thanks to the proliferation of artificial intelligence (AI) within the cybersecurity market.

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Let's look at the reasons SentinelOne could be one of the smartest growth stocks you can consider buying right now if you have just $20 to spare.

Image source: Getty Images.

SentinelOne is getting an AI-powered boost

SentinelOne reported a 22% year-over-year increase in its revenue in fiscal Q2 to $242 million. Even better, the company slightly raised its full-year guidance because of a favorable spending environment, citing an improvement in demand for its AI-enabled endpoint and cloud security platform Singularity.

The company now expects its fiscal 2026 revenue to increase by 22% to $1 billion. CEO Tomer Weingarten pointed out on the earnings conference call that SentinelOne is benefiting from "new customer additions, expansion with existing accounts and increased adoption of our AI and data solutions."

SentinelOne has been integrating AI tools across its cybersecurity solutions, and the good part is that its offerings are gaining traction among customers. For instance, the company's Purple AI security assistant grew at a triple-digit pace last quarter. This solution was attached to more than 30% of the product licenses sold by the company in fiscal Q2.

The strong adoption of this platform isn't surprising, as SentinelOne points out that Purple AI users are witnessing "55% faster threat remediation, 60% lower likelihood of major incidents and an impressive 338% return on investment over just 3 years." This explains why SentinelOne is looking to push the envelope in AI, and its recently announced acquisition of Prompt Security is a step in that direction.

SentinelOne is making this acquisition to further strengthen its AI-native Singularity platform. Prompt Security will help companies oversee their generative AI applications and assets in real time. As a result, it won't be surprising to see SentinelOne attracting more customers while winning a bigger share of the wallets of existing customers since it will have new solutions to cross-sell.

Investors can expect the company's growth to accelerate in the long run

It is worth noting that half of the contracts booked by SentinelOne were for its emerging products focused on AI, cloud, and data analytics. This bodes well for the company, as these niches present an addressable opportunity of close to $50 billion. Therefore, SentinelOne seems to be in a solid position to maintain healthy growth in the long run.

Additionally, new product introductions and its recently announced acquisition should also have a positive impact on its margins thanks to cross-selling opportunities. In fact, SentinelOne is already witnessing margin growth. Its non-GAAP (adjusted) net income margin tripled year over year in the previous quarter to a record 5.4%.

As a result, the company's adjusted earnings quadrupled to $0.04 per share. This also explains why analysts are expecting SentinelOne's earnings growth to accelerate impressively.

S EPS Estimates for Current Fiscal Year data by YCharts

So investors looking to buy a growth stock right now should consider taking a closer look at SentinelOne. Its sales are growing at an impressive pace, its margins are getting better, and it is trading at just under 7 times sales as compared to the U.S. technology sector's average price-to-sales ratio of 8.6, suggesting that investors are getting a good deal right now.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SentinelOne. The Motley Fool has a disclosure policy.