CrowdStrike Just Crossed $5 Billion in Annual Recurring Revenue. Is This the Best Cybersecurity Stock to Own?

Cybersecurity is big business. Given how much of our lives are online these days, that's not exactly a hot take, but it is true.

According to Grand View Research, the global cybersecurity market was worth $271.88 billion in 2025 and is expected to grow at a compound annual growth rate (CAGR) of 11.9% through 2033, when it's projected to be worth $663.24 billion.

A big part of the reason for that growth is artificial intelligence (AI) which presents unprecedented threats to cybersecurity.

Between AI-generated deepfakes or phishing emails and the fact that an AI program doesn't need to eat or sleep like a flesh-and-blood hacker, cyberthreats are proliferating at an alarming rate. It also used to be that you needed a good understanding of computer technology to be an effective hacker. With AI, pretty much anyone can do it.

That's where CrowdStrike (NASDAQ: CRWD) and its Falcon product comes in.

Image source: Getty Images.

Winning the digital arms race

The way Falcon works, per CrowdStrike's marketing material, is that it uses agentic AI to monitor nodes installed on machines across the company's network of customers for threats.

When a threat is detected, the AI agent is capable of responding to it and helping the CrowdStrike customer's internal security team clear the network of the threat.

Falcon gets cybersecurity data from all the computers it's connected to. So, if one node on the network is hit by a novel cyberattack, it might get through that one node, but once it learns how that cyberattack works, it will be able to protect every other node on the network from that same threat.

In that way, you could look at Falcon as a self-reinforcing shield against all the existing threats it knows from its training data. If one part of the shield is breached, once the attack has been routed, the entire shield becomes stronger with the new data expanding Falcon's capabilities.

Falcon also combines 33 modules into one platform. Those modules represent the numerous different cybersecurity programs you might use for cloud security, data protection, or endpoint security. It doesn't require any hardware on the part of its customers either.

So far, 300 of the Fortune 500 companies, 543 of the Fortune 1,000, and the governments of 43 U.S. states use CrowdStrike for their cybersecurity. Each new customer gives Falcon more data and makes it more effective.

CrowdStrike's own projections put its total addressable market at $149 billion today, which it expects to grow to $325 billion by 2030. And for the company's fiscal 2026 (reported March 3, 2026), CrowdStrike's annual recurring revenue (ARR), a major figure for software-as-a-service (SaaS) companies, exceeded $5 billion.

But that wasn't the end of the good news for CrowdStrike.

Flying higher

CrowdStrike's Q4 fiscal 2026 ARR totaled $5.2 billion, up 24% over Q4 2025. Net new ARR for the whole of 2026 exceeded $1 billion, up 25% over 2025.

The company's diluted earnings per share (EPS) for the year grew 15% over its fiscal 2025, and it achieved a 22% non-GAAP (adjusted) operating margin.

However, the company is still not profitable. CrowdStrike's net margin is sitting at -3.35% at present, which is close. If it achieves profitability in the near future, it will be great for shareholders, but that's worth keeping in mind.

Despite its lack of profitability, though, CrowdStrike does have a healthy balance sheet with a debt to equity of 0.18, down from 0.24 in 2025, so it's managing its already relatively low debt well.

So, given its financial health, its explosive growth, and its main product gaining serious traction among hundreds of major companies, CrowdStrike certainly has the potential to become the top dog in cybersecurity in the age of AI.

James Hires has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.