CrowdStrike Holdings is the IBD Stock of the Day in the wake of the RSA conference, where the cybersecurity firm stood out amid industry buzz over generative artificial intelligence. CrowdStrike stock has gained 27% in 2024.
On the stock market today, CrowdStrike stock rose 3.3% to close at 329.55.
From a traditional technical view, CrowdStrike holds an entry point of 365. A 5% buy zone extends to 383.25.
For aggressive investors, there's also an alternative entry of 338 — a "draw-the-line buy point" above the bulk of the trading.
Also, CrowdStrike stock is actionable from its move above the 50-day moving average.
CrowdStrike Earnings Due In June
Fiscal first-quarter earnings for CrowdStrike stock are due June 4.
Investors may want to be cautious ahead of the report. One strategy around earnings would be to use call options.
The RSA conference in San Francisco ran from May 6 to May 9.
In a review of the RSA conference, Morgan Stanley analyst Hamza Fodderwala said: "Feedback was most positive on CRWD during the conference, with strong enthusiasm from both customers and partners. Our checks indicate improving win rates in endpoint and cloud security versus competitors."
Acquisitions Build Cybersecurity Platform
CrowdStrike competes with Microsoft and others in the "endpoint" market. Endpoint security tools detect malware on laptops, mobile phones and other devices that access corporate networks.
In addition to Microsoft, CrowdStrike competes with SentinelOne and Palo Alto Networks. CrowdStrike is among many AI stocks to watch.
In addition, CrowdStrike has upgraded security operations center (SOC) services with automation capabilities provided by generative AI technology. Among the improvements, customers use a conversational user interface rather than a computer dashboard to monitor computer networks for threat detection and response.
Also, CrowdStrike is building a broad, threat-detection cybersecurity platform called XDR, or extended detection and response. It monitors endpoints as well as web/email gateways, web application firewalls and cloud business workloads.
Meanwhile, acquisitions are playing a big role as CrowdStrike and other cybersecurity companies build cloud-based service platforms.
In early March, CrowdStrike acquired Flow Security. The company's earlier purchases include SecureCircle, Pre-empt, Humio, Bionic and Reposify.
For its part, CrowdStrike calls itself the "cybersecurity platform consolidator for the AI (artificial intelligence) era."
CrowdStrike Stock: Technical Ratings
Further, the cybersecurity stock holds a superior IBD Composite Rating of 97, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
CrowdStrike stock has an Accumulation/Distribution Rating of B-. This rating analyzes price and volume changes in a stock over the past 13 weeks of trading. CRWD's current rating indicates more funds are buying than selling.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
CrowdStrike fourth-quarter earnings rose 102% to 95 cents a share on an adjusted basis. Revenue, including acquisitions, climbed 33% to $845.3 million.
Fiscal Q4 Earnings Beat Estimates
Meanwhile, analysts polled by FactSet had projected earnings of 82 cents a share on revenue of $839 million for the period ended Jan. 31.
With CrowdStrike, Wall Street focuses on annual recurring revenue, or ARR. It's a key financial metric tied to subscription services growth.
In Q4, ARR increased 34% to $3.44 billion. Analysts had predicted ARR of $3.39 billion.
For fiscal 2025, which started in April, CrowdStrike predicted revenue of $3.957 billion at the midpoint of its outlook vs. estimates for $3.942 billion.
Sunnyvale, Calif.-based CrowdStrike's IPO in June 2019 raised $659 million.
Founded by two former McAfee executives in 2011, CrowdStrike started out monitoring laptops, mobile phones and other devices that access corporate networks.
In the endpoint market, older antivirus software looks for "signatures" of known malicious software. However, CrowdStrike's more advanced tools learn to identify malware traits rather than specific signatures. That enables them to detect new types of malware.
CrowdStrike Stock And Generative AI
Further, CrowdStrike utilizes a specialized database to analyze and correlate billions of events collected from customers in real time. CrowdStrike uses machine learning, a traditional form of artificial intelligence, in its products.
Just as machine learning can detect new types of malware using predictive models that classify data, ML algorithms have been used for making recommendations, pricing ads and services, detecting spam and fraud, and many other applications.
Newer generative AI models, on the other hand, process "prompts," such as internet search queries, that describe what a user wants to get. Further, generative AI technologies create text, images, video and computer programming code on their own.
In cybersecurity, companies expect generative AI tools to help reduce the time to detect and respond to many forms of computer hacking. Also, they see generative AI automating more functions in security operations centers to help companies deal with a shortage of software engineers.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
