Why CrowdStrike Stock Rocketed Higher Today
Key Points
Cybersecurity stocks got a lift from calls by prominent AI CEOs to slow the development of the technology.
CrowdStrike's full-service, cloud-native cybersecurity service helps protect businesses from unauthorized intrusions.
The stock isn't cheap, but the opportunity is massive.
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Shares of CrowdStrike (NASDAQ: CRWD) were trading sharply higher on Monday, soaring as much as 15.4% in early trading and were still up 15.2% as of 12:22 p.m. ET.
The catalyst that sent the cybersecurity stock higher was a call by industry insiders to slow the development of artificial intelligence (AI).
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Slow your roll
In a post this weekend, Anthropic CEO Dario Amodei called on the AI industry to slow the pace of development. He said that "like many technologies before it, AI brings risks, and because it is such a powerful technology, these risks are serious." Amodei cited a series of concerns, including the" risk of losing control of AI systems, misuse for cyberattacks and bioterrorism, and serious economic disruption." He pointed to the hack of Hugging Face and other systems by OpenAI models as a sign that caution is warranted.
Other high-profile tech executives climbed on the bandwagon, including Space Exploration Technologies (SpaceX) CEO Elon Musk, who wrote in a post on X, "Dario is right." OpenAI CEO Sam Altman echoed the sentiment in his own post, saying the industry needed "consistent rules to manage frontier (model) risk." He went on to clarify, saying that slowing the pace of AI development does "not mean stopping."
So what does this have to do with CrowdStrike?
The debut of Anthropic's Claude Mythos Preview earlier this year ushered in a new era of AI, as the frontier model identified thousands of vulnerabilities across every major operating system and web browser. This helped to underscore the critical need for cybersecurity -- particularly as the capabilities of AI continue to evolve.
CrowdStrike was one of the pioneers of AI-driven cybersecurity, providing endpoint security, threat intelligence, and cyberattack response services that help businesses secure their critical systems.
At 148 times next year's expected earnings, the stock is certainly pricey. However, the company just delivered what is arguably the best quarter in CrowdStrike's history, which suggests a premium is warranted.
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Danny Vena, CPA has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.
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