Tech
CrowdStrike ‘s great quarter provided further proof that cybersecurity is mission-critical as AI adoption accelerates. That gave Jim Cramer confidence that there’s considerably more upside ahead for a stock that’s already more than doubled over the past 12 months. “I think you buy the stock here. I think it takes out the high,” Jim said Thursday on CNBC. “My Charitable Trust has owned it forever.” CEO George Kurtz is a “real competitor,” Jim added. CrowdStrike stock hit an all-time intraday high of $227 on Aug. 14. It had cooled off some heading into Wednesday evening’s earnings. Thursday’s more than 17% rally put shares just shy of a new high. Look at these numbers: CrowdStrike posted a record $333 million of net-new annual recurring revenue (NNARR) in its fiscal 2027 second quarter, up 51% year over year, and more than $45 million above the high end of guidance. This metric measures how much new recurring business was added during the quarter. To put that growth into context, CrowdStrike’s AI-driven strength led to revenue accelerating for the fifth straight quarter and ARR accelerating for the fourth straight quarter. Management also gave positive forward-looking guidance, marked by a record current quarter pipeline that compelled it to raise its full-year top-line growth forecast. The strong print led us to raise our CrowdStrike price target to $230 per share from $220, while keeping our hold-equivalent 2 rating on the stock. It’s not our style to chase one-day double-digit percentage moves higher. So, we have not officially upgraded it, yet. CrowdStrike’s results lifted shares of fellow cybersecurity giant Palo Alto Networks, up more than 10% on Thursday. We will be looking for confirmation of CrowdStrike’s strength when fellow Club name Palo Alto reports its quarterly results next week. CRWD 1Y mountain CrowdStrike 1 year The comeback on cyber started in earnest earlier this year on the premise that AI won’t replace security software after all and that AI will actually increase the need for protection. Cyber stocks late last year and into 2026 were being lumped into the awful enterprise software trade. Jim always felt cyber should not trade with traditional software-as-a-service names. He was proved correct. “The world came to understand that cybersecurity is a necessity for AI adoption,” Kurtz said during the post-earnings conference call. The CEO attributed the quarter’s strong performance to customer urgency on securing AI adoption through increased cybersecurity investment as well as a move from legacy security infrastructure to more modern ones that CrowdStrike offers. Much of the momentum came from what Kurtz referred to as the “Mythos moment,” where customers are increasing their security infrastructure after the release of Mythos, a large language model from leading AI lab Anthropic. Mythos is adept at spotting cyber vulnerabilities, which showed what Kurtz had been saying all along that companies can’t deploy AI and then get AI to protect their systems. The increase in cyber threats as AI gets smarter has been something companies are not willing to gamble on, leading to a boost in demand for what CrowdStrike — and Palo Alto, for that matter — have to offer. To be sure, a key question moving forward is whether acceleration seen this past quarter is sustainable, which will depend in part on continued pipeline conversion. Kurtz reassured that this is going to be a “durable period of strong demand” for products across its entire portfolio, not just AI-driven, that should continue for the next few quarters. Jim tends to agree, especially since CrowdStrike’s “penetration is surprisingly low,” given that 80% of cloud natives have not adopted its cloud security offerings. Next week is CrowdStrike’s annual trade show, called Fal.Con, where the company is to demonstrate how its offerings are protecting businesses from agents going rogue, like the situation where an OpenAI model hacked into a company looking for answers on how to solve a problem in the test environment. Jim called it “a huge new business line.” The event is known as their “biggest pipeline generation of the year,” according to portfolio director Jeff Marks. Last year’s Fal.Con proved to be a big catalyst for the stock. Jim will dive further into the story when he interviews Kurtz for “Mad Money” on Thursday. (Jim Cramer’s Charitable Trust is long CRWD, PANW. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Why Jim Cramer sees CrowdStrike as a buy despite its incredible comeback rally
Source link
