After CrowdStrike’s “Best Quarter in Company History” and Explosive Stock Market Gains, Is It Too Late to Buy?

CrowdStrike (NASDAQ:CRWD) has become an early winner in the artificial intelligence (AI) revolution, and that's delivered a big win to early investors in this cybersecurity giant. The company's innovative platform, Falcon, incorporates AI to identify threats and tackle attacks before they happen. This has translated into explosive revenue growth quarter after quarter, and the company continued marching along this path in the recent period.

In fact, chief George Kurtz called it the "very best quarter in company history." Among other achievements, CrowdStrike delivered record new annual recurring revenue (ARR) and free cash flow. And, importantly, the growth of AI is offering the company a new, significant revenue opportunity.

All of that is positive, but it's also important to keep in mind the stock's explosive performance, something that could mean some of this great news is already priced in. The stock has jumped about 100% over the past year. Is it too late to buy this winning AI stock? Let's find out.

Image source: Getty Images.

CrowdStrike's use of AI

We'll start by taking a look at CrowdStrike's path so far. As mentioned, the company has become a successful user of AI. CrowdStrike's Falcon platform is a lightweight sensor -- meaning it operates in the background and doesn't slow down a computer system's operations -- that looks out for potential danger. The system operates in the cloud and leverages an enterprise's data to detect potential threats and take action.

Falcon offers customers more than 30 modules focused on a range of security specialty areas, from data protection to blocking viruses and securing multi-cloud environments. And the Falcon Flex program allows customers flexibility to manage their changing security needs -- they can shift from one module to another, for example.

All of this has propelled revenue higher. The recent quarter confirmed the company's successes, as new ARR reached a record of $333 million, free cash flow hit a record of $377 million, and Falcon Flex accounts attained an ending ARR of more than $2.2 billion. As mentioned, the company said that this quarter was the best ever -- and expressed significant optimism about what's ahead.

Now, let's consider the newish element that's driving this growth. As Kurtz said during the earnings call, today's AI agent "is both a friend and foe." The AI agent, used increasingly by companies and individuals, carries out various tasks that previously were carried out by humans. This is the actual application of AI to real-world situations, and it's seen as the next big area of AI growth.

New cyberattacks

Though these agents can be extremely helpful, they also could lead to new attacks and threats. And this opens up a whole new area of opportunity for CrowdStrike. The company cites the Mythos moment earlier this year -- when Anthropic's Mythos model showed how AI could exploit software vulnerabilities -- as being a key turning point.

"Ever since Mythos, we have seen growth in our business, not measured by meetings or calls, but measured by ARR, and we don't see the threat landscape subsiding," Kurtz said.

The company said its customers' use of Anthropic's Claude, as well as AI agents in general, is growing in the triple digits -- and this has prompted them to focus more and more on cybersecurity.

All of this suggests that CrowdStrike may be in the early days of another big wave of growth. This is positive, but the stock has soared in recent times, and as a result, it trades for 181x forward earnings estimates -- a level that isn't cheap.

So is it too late to buy this standout cybersecurity player? The answer depends on your investment style. If you're a value investor, you'll find opportunities better suited to your needs elsewhere.

If you're a growth investor, though, you might choose to add a few shares of CrowdStrike to your portfolio even at today's premium price. The recent positive earnings results may be priced in, but the stock still has room to run over the long term. As AI becomes a greater part of daily life, CrowdStrike could see revenue growth explode higher over the long run -- and that could deliver a big win to investors who today choose to buy and hold.

Adria Cimino 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.