CrowdStrike Stock Is Crushing the S&P 500 in 2025. Is the Artificial Intelligence (AI) Juggernaut Still a Buy?

CrowdStrike (NASDAQ: CRWD) is a leading provider of cybersecurity for enterprises. Its success boils down to two things: its Falcon platform, one of the only true all-in-one solutions in the industry, and its artificial intelligence (AI)-powered approach, which automates threat detection and incident response processes.

CrowdStrike stock has soared by 34% so far in 2025, crushing the S&P 500 (SNPINDEX: ^GSPC) index, which is up by just 2%. The company continues to deliver solid financial results, and management has put forward an ambitious long-term revenue forecast, which implies significant growth ahead.

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With that said, CrowdStrike stock isn't cheap right now. Will that keep a lid on any potential returns in the short term, or is more upside on the table? Read on.

Image source: Getty Images.

Falcon adoption continues to soar

In the past, cybersecurity providers often specialized in very specific segments of the industry, so businesses had to deal with multiple vendors to achieve adequate protection. CrowdStrike's Falcon platform is so popular because it offers 30 modules (products) that cover the entire cybersecurity stack, protecting cloud networks, employee identities, endpoints (computers and devices), and more.

During the fiscal 2026 first quarter (ended April 30), a record 48% of CrowdStrike's customers were using at least six Falcon modules, which increased from 44% in the year-ago period. In other words, businesses are quickly expanding their spending on the platform.

Falcon Flex is a relatively new subscription option that is driving even greater adoption. It was launched in 2023 and allows customers to reallocate their budgets to different modules as their needs change throughout their contract period. As a result, CrowdStrike says the average Flex customer tries nine modules, so it introduces them to products they might not have otherwise considered.

This is driving a phenomenon that CrowdStrike calls "Reflexes." The company said 39 Flex customers recently exhausted their budgets within the first five months of their 35-month contract periods, and each of them came back to expand their spending.

No matter which subscription option customers choose, AI is at the heart of their Falcon experience. It enables the platform to work autonomously in the background of the enterprise, thwarting threats when they arise, with minimal human intervention required. Plus, the company's Charlotte AI virtual assistant stands ready to help cybersecurity managers dive deeper into incidents and gain a better understanding of the risks in their digital environments.

Slowing revenue growth but robust long-term guidance

During its fiscal 2026 first quarter, CrowdStrike generated $1.1 billion in revenue, a 20% increase from the year-ago period. The result was right in line with management's expectations, but there is no denying the company's revenue growth is gradually slowing:

CRWD Operating Revenue (Quarterly YoY Growth) data by YCharts. YoY = year over year.

A couple of things are at play here. First, CrowdStrike's revenue base is becoming larger as the company matures, so it's difficult to maintain the same rapid growth rates from the past. Second, the cybersecurity giant is still feeling the effects of its major outage last July, which knocked 8.5 million customer computers offline. It offered "customer choice packages" to those affected by the outage, which included discounted Flex subscriptions, and this is temporarily weighing on its revenue.

Companies with slowing growth tend to attract lower valuation multiples from investors -- in other words, it can weigh on their stock price (more on this later).

On a more positive note, CrowdStrike remains committed to achieving $10 billion in annual recurring revenue (ARR) by fiscal year 2031, implying potential growth of 127% from its Q1 level of $4.4 billion. Since this target was first issued prior to last year's outage, management's continued commitment suggests there should be no long-term impacts from the incident.

CrowdStrike stock is very expensive, so upside might be limited

CrowdStrike stock set a new record high on June 3, only to sink by around 7% in after-hours trading following the release of its Q1 report. The stock is quite expensive, so it can be vulnerable to corrections if the company doesn't knock it out of the park with its financial results.

In fact, CrowdStrike is trading at a price-to-sales (P/S) ratio of 28.7, which is substantially higher than the valuations of some of its main rivals in AI-powered cybersecurity:

CRWD PS Ratio data by YCharts. PS Ratio = price-to-sales ratio.

CrowdStrike's premium valuation might have been justified in the past because its revenue was increasing at a significantly faster rate than that of its competitors, allowing it to quickly grow into its elevated P/S ratio. But it no longer has a clear edge in that department -- in fact, Zscaler and SentinelOne both delivered faster top-line growth than CrowdStrike in their recent quarters.

I think it will be very difficult for CrowdStrike stock to continue its march higher in the short term, especially since it's already up 34% year to date. But there might be an opportunity here for investors willing to hold the stock for the next six years or so, as it could be cheap at the current level if the company successfully delivers $10 billion in ARR by fiscal 2031.

In summary, CrowdStrike stock may be an attractive buy for long-term investors, but those looking for solid gains in the next 12 months or so may be left disappointed.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.