Dr J Rould
Full-Time Tech Investor, Quantum/Cybersecurity, Philosophy Background
SentinelOne should be crushed because it offers the same sort of product as CrowdStrike, just worse, and CrowdStrike's flywheel keeps widening the moat between them. The open question is whether cybersecurity is a follow-the-leader market or supports multiple long-term winners, with niche players such as Rubrik and Zscaler and formidable ones such as Cloudflare and Palo Alto Networks. x.comÂ
CrowdStrike and Palo Alto Networks' strength is an ultra-overcrowded trade that is likely to flip this quarter. x.comÂ
Anthropic and OpenAI's inevitable move into cybersecurity threatens CrowdStrike and Palo Alto Networks' valuations. They look like the market's biggest bubble stocks right now; CrowdStrike trades at 40x ARR despite 25% growth and negative GAAP EBIT. 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 at 30x sales for a $170 billion software company is hard to see ending well. x.comÂ
CrowdStrike is worth holding through the next cycle because enterprise-scale endpoint security is a fortress every company needs. x.comÂ
SentinelOne's growth is solid and profits are starting to pour in, yet the stock trades at only 5x forward sales. It reported $56M of net new ARR, with total ARR of $1.218B, up 22% year over year. Matching CrowdStrike's net new ARR jump would have required about $65M; per @SergeyCYW, CrowdStrike added a record $333M, up 50.5%. x.com x.com x.comÂ
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 at 40x forward sales is hard to take seriously as a best idea into 2027. x.comÂ
SentinelOne doesn't need to beat CrowdStrike to work, because cybersecurity is large enough for multiple winners and should keep growing as AI adds agents, cloud workloads and autonomous software that need protecting. It already has more than $1.2 billion of ARR, 20%-plus growth and improving margins. Its growth is the slowest of the group today, but if it remains a major security platform over the next decade, its current valuation leaves a lot of room. x.comÂ
Zscaler could get a catch-up trade if money starts rotating into cybersecurity laggards, with CrowdStrike up eight days in a row. x.comÂ
