1 Supercharged Artificial Intelligence (AI) Stock Up 500% in 5 Years to Buy Now, According to Wall Street (Hint: Not Nvidia)

1 Supercharged Artificial Intelligence (AI) Stock Up 500% in 5 Years to Buy Now, According to Wall Street (Hint: Not Nvidia)

Sales of artificial intelligence (AI) hardware, software and services are expected to reach $1.8 trillion by 2030, up from $279 billion in 2024, according to Grand View Research. This translates to annual growth of 37% over the next six years. Opportunities of this magnitude arise approximately once every ten years.

Probably the last comparable technological transformation was the advent of cloud computing. This market is now approaching $1 trillion, and patient investors who have purchased shares of Amazon, AlphabetAnd Microsoft ten years ago we beat the S&P500 several times. AI could be just as lucrative, if not more so.

Crowd strike (NASDAQ:CRWD) there isn’t the hype surrounding it Nvidia, but the company stands to benefit from AI and has already demonstrated its ability to create value for investors. The stock has surged 503% since its June 2019 IPO, and shares have more than doubled in the past year alone.

Despite these returns, 92% of Wall Street analysts who follow CrowdStrike view the stock as a Buy, and the remaining 8% view it as a Hold. Not a single analyst recommends selling. Here’s what investors should know.

CrowdStrike has a strong presence in several cybersecurity markets

CrowdStrike is a leader in endpoint security software, a vertical concerned with protecting devices such as servers and desktops. The company is also gaining market share in the terminal market faster than its peers, according to a survey by Morgan Stanley. An advantage of leadership in this particular area cyber security The vertical is that companies collect most of their threat intelligence from endpoints. CrowdStrike therefore has robust data to support its strategy. artificial intelligence (AI) models.

CEO George Kurtz says the CrowdStrike Falcon platform has the “most effective and accurate AI models to prevent attacks.” Frost & Sullivan analysts reached a similar conclusion in a 2022 report: “CrowdStrike leads the industry in applying artificial intelligence/machine learning to endpoint security . »

His leadership in endpoint security has also helped the company expand into other verticals. CrowdStrike is a recognized leader in cloud security, identity threat detection, risk-based vulnerability management, and managed detection and response services. The company also offers one of the fastest growing security information and event management (SIEM) solutions on the market and recently launched software products for data protection and IT automation.

Additionally, CrowdStrike is tapping into the demand for technology popularized by ChatGPT with its new generative AI assistant, Charlotte AI. The conversational interface helps security teams quickly assess their IT environments, identify threats and take corrective action. Charlotte AI also recommends ways to proactively reduce risk.

Management says Charlotte AI will capture a $7 billion opportunity by 2028. Other companies are building similar conversational assistants, but Morgan Stanley analysts believe CrowdStrike is one of the “best-positioned” software companies » to monetize generative AI, due to its scale and unique data.

CrowdStrike is one of the fastest growing enterprise software companies

CrowdStrike reported fourth-quarter financial results that beat expectations. Revenue increased 33% to $845 million and non-GAAP net income more than doubled to $0.95 per diluted share. The company also reported a 98% gross retention rate, meaning it retained almost all of its customers.

CrowdStrike expects non-GAAP revenue and net income growth of 31% and 63%, respectively, in the first quarter. Management also said that annual revenue and non-GAAP net income could increase by 30% and 32%, respectively. That makes CrowdStrike one of only three publicly traded enterprise software companies targeting revenue growth of more than 30% this year, according to Morgan Stanley.

CrowdStrike shares trade at a reasonable valuation

Cyberattacks are increasingly costly and sophisticated. Cloud migration, software adoption and the proliferation of connected devices are creating new vulnerabilities, and annual damages inflicted by cybercrime are expected to increase 44% to $13 trillion by 2028.

Cybersecurity is not a discretionary expense but an essential part of the company’s IT ecosystem. CrowdStrike is well-positioned to capitalize on this opportunity, given its leadership in endpoint security, its growing influence in other cybersecurity verticals, and its pipeline of new products, such as Charlotte AI.

Wall Street analysts expect CrowdStrike to grow sales 29% annually over the next five years. This consensus estimate makes its current valuation of 27.9 times sales reasonable. Patient investors should consider purchasing a small position in this growth stock now.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennevine holds positions at Amazon, CrowdStrike and Nvidia. The Motley Fool holds positions and recommends Alphabet, Amazon, CrowdStrike, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Mad Motley has a disclosure policy.

1 Supercharged artificial intelligence (AI) grew 500% in 5 years to buy now, according to Wall Street (hint: not Nvidia) was originally published by The Motley Fool

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