CrowdStrike reported better-than-expected quarterly results and a better-than-expected outlook Wednesday night, but its stock sold near all-time highs. The hot money that flowed into companies like Hewlett Packard Enterprise and Dell, aiming to soar their earnings, definitely booked profits, with their stock prices down more than 11% to about $664 each. Please let me sell it. We are not short-term thinkers. CrowdStrike’s fiscal 2027 first-quarter revenue rose 26% year-over-year to $1.39 billion, beating the consensus estimate of $1.36 billion, according to LSEG. Adjusted earnings per share (EPS) for the quarter ended April 30 rose 51% to $1.10, beating expectations of $1.07, according to LSEG data. CRWD YTD Mountain CrowdStrike YTD In addition to Beat and Raise, CrowdStrike announced a 4-for-1 stock split, with trading on a split-adjusted basis scheduled to begin on July 2nd. We increase our price target from $650 to $750 per share while maintaining our 2 rating of Hold equivalent to give the stock time to settle before calling it a Buy. CrowdStrike stock closed at a record high of $782 on Monday. Conclusion Putting aside the short-sighted stock reaction that was also seen after Palo Alto Networks’ earnings on Tuesday evening, CrowdStrike’s strong report adds to the growing body of evidence that the adoption of artificial intelligence is a boon, rather than a threat, for cybersecurity businesses. The idea that large companies around the world would put their data at risk by leveraging AI models to launch their own cybersecurity solutions has certainly proven to be fanciful. As Jim Cramer has said all along, the fears that led to a 30% cut in cyber stocks earlier this year couldn’t have been more wrong. CEO George Kurtz called Mythos a “transitional moment” and said on a post-earnings conference call that the powerful, yet-to-be-released Anthropic model highlights “the importance for defenders to identify vulnerabilities much earlier than before, including chaining together multiple vulnerabilities to create deadly cyberattacks.” Rather than just release Mythos, which has been tested and proven to be great at finding security holes, Anthropic initially made the model available to 11 organizations, including the club names CrowdStrike and Palo Alto Networks. The initiative, called “Project Glasswing,” is asking for help to keep Mythos safe. On Tuesday, Anthropic expanded its efforts to include 150 organizations in more than 15 countries. Kurtz said AI is driving demand for security solutions in two ways. First and most obviously, clients need to secure AI before deploying it. Cyber has become a critical component of AI infrastructure because enterprises cannot hand over critical access codes to unsecured AI agents. Second, AI has created an “explosion of greenfield attack surfaces that require cybersecurity,” the CEO said. In Cyberspeak, a greenfield attack surface is the potential vulnerability that arises from the introduction of completely new technology. Given all the data centers being built, Kurtz said, all parties across the supply chain are experiencing hyper-growth and, in turn, increased demand for security. “For the first time in my career, the market view of the role of cybersecurity has shifted from being viewed primarily through the lens of risk management, compliance, and protection to being seen as a strategic accelerator and key enabler of AI adoption.” Put another way, hyperscalers and neoclouds can order all the hardware they need (or can buy), but it’s CrowdStrikes and Crowds of the world that enable enterprises to securely deploy and scale AI solutions. Palo Alto Networks. Asked about the conversations CrowdStrike has had with customers in recent months, Kurtz said, “The biggest thing for me was that when we asked our customers what outcomes they wanted, it wasn’t just the technology outcomes themselves. “We need to solve the security problem because we want to deploy AI faster. We want to move the business faster. Our CEO is demanding that we deploy AI. We can’t do it securely.” While lack of memory has become a bottleneck for building AI infrastructure, cybersecurity appears to be the gateway to AI adoption. Why we own it Cybersecurity is a must for businesses in the digital age. CrowdStrike, led by co-founder and CEO George Kurtz, is one of the best, along with fellow club member Palo Alto Networks. The company specializes in endpoint protection through its AI-native platform called Falcon. Competitors: Palo Alto Networks, Fortinet, SentinelOne, Microsoft Portfolio Weight: 2.57% Latest Purchase Date: March 24, 2026 Start Date: October 16, 2024 When it comes to stock splits, we are positive about stock splits when the price of a share starts to become prohibitive, as was the case with CrowdStrike. The reason is that investors don’t seem to like the idea of owning fractional shares, and lowering the share price makes the stock feel more accessible. Indeed, for an investor who quadruples the number of stocks in his portfolio at a quarter of the original cost per share, a stock split does not create any more value. We talked about this in a little more detail about two years ago when Nvidia split its stock 10-1. Guidance For the full year 2027, CrowdStrike management has raised its guidance. Note that the earnings guide does not yet take into account announced splits. Total revenue is expected to be between $5.91 billion and $5.96 billion, up from the previous range of $5.87 billion to $5.93 billion and above expectations of $5.89 billion, LSEG said. Adjusted EPS is expected to be between $4.88 and $4.96, up from the previously provided range of $4.78 to $4.90 and also above the LSEG consensus estimate of $4.86. Annual recurring revenue (ARR) is expected to finish in the range of $6.53 billion to $6.56 billion for the year, beating previous estimates of $6.47 billion to $6.52 billion and also beating expectations of $6.5 billion, according to FactSet. CrowdStrike also issued a solid outlook for the second quarter of fiscal 2027. Total sales are expected to be between $1.44 billion and $1.44 billion, higher than expectations of $1.43 billion, LSEG said. Adjusted EPS is expected to be between $1.16 and $1.17, roughly in line with expectations compiled by LSEG. ARR is expected to be between $5.79 billion and $5.8 billion, also above expectations of $5.77 billion, according to FactSet. (Jim Cramer’s Charitable Trust is long CRWD, PANW. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
