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.com 

Combining estimated NTM revenue growth with trailing GAAP EBITDA margin makes Palo Alto Networks, Datadog, JFrog, Rubrik and Snowflake look overvalued against forward EV/sales. Zoom, Alphabet, Oracle, AppLovin, Microsoft, Fair Isaac, Adobe, Amazon and Teradata remain undervalued on this Rule of 40 comparison; Palantir, Cloudflare and CrowdStrike remain overvalued. x.com 

Continued improvement in fundamentals and technicals could carry Palantir to megacap scale. A $1 trillion market cap is a realistic destination for strong growth companies, and Palantir appears on that path, though its timing is uncertain. Drawdowns remain opportunities to accumulate until the thesis changes. x.com 

Palantir is a worse business than CrowdStrike, Cloudflare and Datadog and is at the tail end of its acceleration cycle, while the cybersecurity supercycle may just be starting. So its fall to half CrowdStrike's and Snowflake's EV-to-operating-income multiple, noted by @CoorsLightCEO, makes sense once anchoring is removed. All of them are overvalued, though. x.com 

Hyperscaler cloud integration and frontier AI labs could take a fair bit of cybersecurity's economics. Rising AI-token budgets also make higher cyber spending a stretch. Palo Alto Networks, CrowdStrike and Cloudflare have nearly $1 trillion in market cap on less than $20 billion in revenue; even high-quality Palo Alto and Cloudflare look too expensive, while Okta looks indefensibly expensive. The theme has real demand, but these valuations look too high in the short to medium term. x.com 

Cloudflare deserves its premium multiple far more than CrowdStrike does. Cloudflare is growing about 40% against CrowdStrike's mid-20s, and it adds a call option on agentic expansion. Both trade at nosebleed valuations. x.com 

CrowdStrike is not worth buying at 40x revenue, and there are very few plausible scenarios in which it is ever worth that multiple. AI is not overhyped, but the argument that massive tech disruption justifies the price echoes 2021, when Covid was said to be changing how people worked. As in 300 years of technological change, there are likely far fewer losers than expected. x.com  x.com 

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.com 

Palantir may be undervalued because the market values it as a software company while its opportunity is much bigger. It spans AI deployment, government contracts, enterprise adoption and mission-critical data infrastructure, and expensive stocks can stay expensive when the business keeps expanding. x.com 

Cybersecurity is the real bubble right now, because greater importance in the age of AI does not justify paying valuations like 40x sales for names such as Cloudflare, CrowdStrike and Palo Alto Networks. x.com