Dr J Rould
Full-Time Tech Investor, Quantum/Cybersecurity, Philosophy Background
CrowdStrike may distinguish itself from an expensive cybersecurity group by showing more breakneck growth at earnings next month. Fortinet's slowing product revenue exposed how much relentless execution investors had priced into the group's extreme multiples, pulling CrowdStrike down in sympathy. CrowdStrike remains in a higher tier than Fortinet, which itself ranks above SentinelOne. x.com x.comÂ
SentinelOne appears undervalued relative to its expected revenue growth. Analysts forecast 19.2% NTM revenue growth, versus 23.2% for CrowdStrike, which trades at a premium on forward EV/sales. x.comÂ
CrowdStrike stands out over Palo Alto Networks for 2026 because it has higher sales and EPS growth and stronger projections, while the two have similar charts. x.comÂ
CrowdStrike and Palo Alto Networks need 50%-plus growth to deliver even a 10% IRR over a realistic horizon, but almost no conceivable case gets them there. They feel as dumb as Zoom and Peloton in 2021. Even if revenue doubles over four to five years, Palo Alto would still trade at 10x revenue and CrowdStrike at 20x, leaving little prospect of a real IRR; Palo Alto is growing in the teens today. x.com x.com x.comÂ
CrowdStrike and Palo Alto Networks should be enormous winners as agentic AI makes cybersecurity every enterprise's top priority, even ahead of AI investment. Threats from rogue internal agents and adversaries mean firms will rush to upgrade security, move to best-of-breed vendors and sharply raise budgets. Expected acceleration at leaders like CrowdStrike over the next 2-6 quarters looks far too low. CrowdStrike is the most advanced; Palo Alto is also favored, though some easy money is made. … Show more
CrowdStrike's re-rating reflects a massively expanded market in which security seats are defined by AI agents rather than employees. The Mythos model announcement and a frontier model going rogue with cyber attacks changed the fundamentals since the stock was at $100. It is very expensive versus its history and peers, and @InvestingVisual notes it trades at 109x forward free cash flow, but that does not mean nothing has changed. x.comÂ
CrowdStrike's growth is too slow to justify its valuation. Its forward P/E has climbed to about 190, while stock-based compensation exceeds operating earnings, so reported free cash flow margins do not show what the business actually earns. x.com x.com x.com x.comÂ
AI is turning security spending from optional to essential, and beats from CrowdStrike and Okta confirm it. CrowdStrike's Q2 revenue rose 26% with record net new ARR of $333M, up 51%, and raised guidance; Okta's RPO reached $4.86B, up 17%, with a second guidance raise this year, after Fortinet also raised. AI agents and coding widen attack surfaces, Morgan Stanley estimates up to $220B of added security demand, and buyers are consolidating onto platforms. x.com x.comÂ
Fortinet's valuation leaves it vulnerable to a sharp drop: it trades above 53x next-twelve-month earnings despite EPS growth below 20%. Its post-earnings tumble illustrates that risk. x.comÂ
CrowdStrike at 40x forward sales is hard to take seriously as a best idea into 2027. x.comÂ
SentinelOne should be growing far faster on about one-fifth of CrowdStrike's revenue, yet its growth keeps slowing. Revenue grew 20% versus CrowdStrike's 23%, billings growth slowed to 11.7%, $100k+ customer additions fell and retention slipped to 109% versus about 115% at CrowdStrike. The GAAP net loss widened to $110M, free cash flow is negative and net margin has not improved since 2024. SBC is 29% of revenue, the share count rose 4.2%, and buybacks make no sense with negative free cash flow. … Show more
