The artificial intelligence revolution brings along with it a need for cybersecurity. That’s because every new digital process enabled by AI faces security threats.
Cybersecurity spending totaled $213 billion last year, up 10% from 2024. And it’s likely to rise another 13% to $240 billion this year, estimates Gartner, a technology information firm.
CrowdStrike (NASDAQ: CRWD) is one of the world’s preeminent cybersecurity firms. The company has a platform called Falcon with multiple services. The flagship offering is endpoint security, which protects network-connected devices (endpoints) like laptops, phones, and servers from cyber threats.
Other services include cloud security; managed services, which includes threat-hunting and incident response; and observability, which gives visibility into system performance and security threats. Offering an array of services constitutes an advantage for CrowdStrike as cyber threats mount.
“In an evolving landscape that continues to increase in threat complexity and intensity, we see IT (information technology) security teams looking for platforms that offer more holistic security coverage versus point solutions that can inadvertently create data silos,” wrote Morningstar analyst Malik Ahmed Khan.
In for a dime, in for a dollar
CrowdStrike frequently attracts customers to purchase one service initially and then convinces them to purchase others as well.
“By collecting and analyzing the rich data coming into its platforms, a cybersecurity vendor such as CrowdStrike can uncover threats and new threat signatures that can then be used to update its entire client base’s security posture,” Khan said. “This network effect is at CrowdStrike’s core.”
Also, by providing a broad range of cybersecurity solutions under the same platform, CrowdStrike can help its clients avoid having to manage multiple platforms, he noted.
Analysts are impressed with CrowdStrike’s customer retention efforts. Its annual recurring revenue soared 23% in the fiscal 2026 third quarter (ended Oct. 31) from a year earlier to $4.92 billion. Its net new recurring revenue hit a record $265 million in the quarter. The company’s total revenue climbed 22%, and it registered a net loss of $34 million, doubling from a year ago.
AI brings business
The technology developments brought by AI are a boon for CrowdStrike’s business. “As more companies undergo digital transformations, the updated form of protection focuses on securing an enterprise from various attack vectors that did not previously exist, such as Internet of Things and cloud workloads,” Khan said.
All of this has been good for CrowdStrike’s stock. It has generated annualized returns of 24.9% for one year, 64.9% for three years and 17.8% for five years, beating the S&P 500 in each period. The company went public in 2019 and has a market capitalization of $120 billion.
To be sure, CrowdStrike suffered a setback in July 2024, when it gave a faulty software update to its Microsoft Windows customers, crashing 8.5 million devices globally, according to Microsoft. CrowdStrike’s stock plunged 44% from July 1 to July 29.
But the company worked hard to help its affected customers, and they responded with loyalty. The shares have more than doubled since July 29, 2024.
Given the AI explosion and CrowdStrike’s solid business execution, it may continue to thrive.
The author owns shares of CrowdStrike.
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