CRWD: Future Performance Will Reflect AI Expansion And Competitive Industry Dynamics

CrowdStrike Holdings saw its analyst price target increase from approximately $519 to $533. Analysts cited ongoing momentum in annual recurring revenue and positive channel checks as reasons for heightened expectations.

Analyst Commentary

Recent research notes and price target revisions reflect a predominantly positive outlook on CrowdStrike Holdings, with most analysts pointing to sustained momentum, product strength, and favorable market dynamics. However, some note areas of caution that could affect near- and long-term performance.

Bullish Takeaways

Bullish analysts highlight consistent growth in annual recurring revenue, with expectations for strong quarterly results and management confidence in surpassing 20% year-over-year growth targets into fiscal 2027.
Several reports point to positive partner feedback and channel checks, including robust deal flows and pipeline generation. This indicates customer satisfaction and a competitive edge in core endpoint and emerging security markets.
New product announcements, especially around artificial intelligence and an expanding product suite, are viewed as strategic drivers for continued platform expansion and future growth acceleration.
Momentum in enterprise security budgets and technology evolution, including agentic solutions and an integrated security platform, is expected to benefit CrowdStrike's valuation and reinforce its industry leadership.

Bearish Takeaways

Bearish analysts, while optimistic longer-term, caution that current valuation levels remain elevated compared to competitors. This raises concerns about near-term upside potential.
There is skepticism regarding whether upcoming results will be enough to act as a near-term catalyst for the shares, given recent pullbacks and broader software sector volatility, especially among leading AI companies.
Some survey feedback notes mixed responses regarding the company's competitive positioning outside of core cloud security, such as in identity solutions, and limited insight into customer adoption of emerging AI features.

What's in the News

CrowdStrike Charlotte AI achieved FedRAMP High Authorization, expanding advanced AI-driven security to U.S. government agencies through the Falcon platform in GovCloud. (Key Developments)
CrowdStrike was named one of three inaugural partners in the Google Unified Security Recommended program, recognizing its Falcon platform for endpoint protection and deep Google Cloud integrations. (Key Developments)
F5 and CrowdStrike established a strategic alliance with a first-of-its-kind integration. The partnership embeds Falcon Sensor and managed threat hunting into F5 BIG-IP to deliver AI-driven network perimeter security. (Key Developments)
New Falcon for XIoT innovations launched, delivering automated asset discovery, segmentation visibility, and unified insights for OT and XIoT environments. This extends security coverage. (Key Developments)
CrowdStrike and CoreWeave partnered to secure AI cloud workloads and power agentic AI innovation, building on previous collaborations with NVIDIA. (Key Developments)

Valuation Changes

The Fair Value Estimate has increased slightly, moving from $518.96 to $533.26.
The Discount Rate has remained nearly unchanged at 8.42%.
The Revenue Growth forecast has decreased modestly, changing from 21.93% to 21.55%.
The Net Profit Margin has improved, rising from 6.24% to 6.50%.
The Future P/E Ratio has decreased slightly, shifting from 356.88x to 355.60x.

Strategic innovations like Falcon Flex and AI tools are enhancing customer relationships and efficiency, leading to potential revenue growth and improved margins.
Strong cloud partnerships and investments in security products position CrowdStrike for significant market expansion and sustained demand.
Execution risks from reliance on emerging products and acquisitions might impact revenue growth if these products underperform.

Catalysts

About CrowdStrike Holdings

Provides cybersecurity solutions in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The introduction of Falcon Flex, a subscription model that accelerates module adoption and simplifies procurement, is increasing customer commitment and lengthening customer relationships, potentially leading to increased future revenue and improved net margins due to larger, bundled sales.
CrowdStrike's AI offerings, such as Charlotte, and their innovation in AI capabilities are driving efficiency and operational enhancements both internally and for customers, which could improve future earnings by lowering operational costs and increasing customer satisfaction.
The company's ongoing success with cloud and partner ecosystems, including surpassing $1 billion in AWS Marketplace sales, indicates strong growth potential in cloud-derived revenues and faster deal cycles, enhancing revenue streams and market penetration.
Investments in emerging products like Exposure Management, Cloud Security, and Identity Protection that replace legacy systems indicate potential for significant ARR growth, impacting future revenues positively.
The strategic focus on Next-Gen SIEM, cloud-native security, and large-scale partnerships, along with CrowdStrike's expansive data capabilities for AI development, positions the company for robust demand growth, which can drive revenue and contract value higher in future periods.

CrowdStrike Holdings Earnings and Revenue Growth

CrowdStrike Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming CrowdStrike Holdings's revenue will grow by 22.1% annually over the next 3 years.
Analysts assume that profit margins will increase from -6.8% today to 8.7% in 3 years time.
Analysts expect earnings to reach $691.1 million (and earnings per share of $2.54) by about September 2028, up from $-297.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 232.7x on those 2028 earnings, up from -357.9x today. This future PE is greater than the current PE for the US Software industry at 36.2x.
Analysts expect the number of shares outstanding to grow by 2.38% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.41%, as per the Simply Wall St company report.

CrowdStrike Holdings Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

There is a risk that CrowdStrike's reported forward-looking statements may not materialize as expected due to uncertainties, which could negatively impact future revenue and earnings.
The financial results and projections include significant non-GAAP adjustments, which may mask potential volatility and impact perceptions of net margins and profitability.
Competitive pressures in the cloud security market and the need for rapid innovation may increase operational costs, potentially impacting operating margins and free cash flow.
The reliance on emerging products and recent acquisitions, such as Adaptive Shield, to drive growth could introduce execution risks that might affect revenue growth if these products do not perform as anticipated.
Any failure to successfully execute the Falcon Flex subscription model or to maintain high customer retention rates could negatively affect the company's ARR growth and long-term revenue projections.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $469.159 for CrowdStrike Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $610.0, and the most bearish reporting a price target of just $330.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.9 billion, earnings will come to $691.1 million, and it would be trading on a PE ratio of 232.7x, assuming you use a discount rate of 8.4%.
Given the current share price of $423.51, the analyst price target of $469.16 is 9.7% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.