Up Over 100% in 2026, Is CrowdStrike Still a Buy?
Key Points
The last time CrowdStrike stock was trading at a price-to-sales ratio this high was in late 2021.
CrowdStrike is still not reliably profitable.
In its most recently reported fiscal quarter, CrowdStrike's annual recurring revenue rose 25% year over year, and overall revenue grew by 26%.
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It has been an exceptional year for many stocks in the S&P 500 (SNPINDEX: ^GSPC). CrowdStrike (NASDAQ: CRWD) has risen by more than 100%, and it's still only the 19th-best-performing stock in 2026. There have been many years when a performance like that would've claimed the top spot.
But after that remarkable run-up, has the stock gotten too far ahead of itself, or is CrowdStrike still worth buying?
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CrowdStrike combines AI and cybersecurity
People are using AI in a myriad of ways, but not every one of those uses is good or safe. Cybercriminals are arming themselves with AI tools to exploit systems' vulnerabilities, and that has made them more dangerous than ever. As a result, it's more important than ever for businesses and other organizations to have great cybersecurity. CrowdStrike is one of the best options due to its wide-ranging product lineup and focus on endpoint protection.
Its endpoint protection platform learns to recognize what is normal usage and what is abnormal at each of its network access points. If it detects an abnormality, it can shut down the device before any damage is done. This protects a company's systems from intruders, but CrowdStrike also has 32 other modules that can be combined in customized packages to provide complete cybersecurity coverage tailored to customers' needs.
Currently, 51% of CrowdStrike's clients use at least six of its products. This percentage has been steadily increasing, which shows that it has a strong ability to upsell to its customers.
CrowdStrike has delivered strong growth recently, with its annual recurring revenue rising 25% year over year in its fiscal 2027 second quarter (which ended July 31), and overall revenue growing by 26%.
CRWD Revenue (Quarterly YOY Growth) data by YCharts.
This was a slight acceleration over previous quarters, and Wall Street analysts project CrowdStrike will deliver 23% revenue growth next year. That seems like a slow growth pace for a company that just doubled its share price in under a year, which is raising some red flags for me as an investor.
The question is, was CrowdStrike's valuation low enough to warrant this kind of rise with a relatively slow growth rate? The answer is no.
CrowdStrike is not a consistently profitable business, so valuing the stock based on sales makes the most sense. From this standpoint, CrowdStrike is now around the most expensive it has been during its entire existence in the public market. When it reached its all-time high P/S ratio in late 2021 (right before the software sector crashed in 2022), it was growing at a far faster pace than it is now.
CRWD Revenue (Quarterly YoY Growth) data by YCharts. PS = price-to-sales.
This is a major red flag for me, as it shows that CrowdStrike's stock performance this year has been driven more by hype than its actual business performance. With the situation not looking like it will change anytime in the near future, I think it may be time for shareholders to take some of their gains off the table and find a new stock to invest in, as the expectations priced into CrowdStrike's stock now are just too high.
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Keithen Drury has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.
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