CrowdStrike delivered robust quarterly results on Tuesday, exceeding expectations across all key measures. Still, the market was wavering on whether AI would be the company’s friend or foe. We believe it’s the former. Revenue in the fiscal fourth quarter increased 23% year over year to $1.305 billion, beating the consensus estimate of $1.297 billion compiled by market data provider LSEG. Adjusted earnings per share (EPS) increased to $1.12 in the three months ended Jan. 31, beating the $1.10 estimate, according to LSEG. Shares of the cybersecurity provider dipped less than 1% in after-hours trading. CRWD 1Y mountain CrowdStrike 1-year return Bottom line For CrowdStrike to trade higher, the market needed to see a combination of two things. First, a continuation of its strong financial performance, which did not disappoint, with a round of clean beats and upbeat forward guidance for the new fiscal year. Second was a change in the company’s narrative. The reason CrowdStrike shares are down 16% this year, alongside many other enterprise software companies, is that some investors believe that large language models (LLMs), with their rapidly improving capabilities, will one day displace even the best traditional cybersecurity vendors. We acknowledge the risks out there, but we are not one of those investors. Instead, we agree with CrowdStrike founder and CEO George Kurtz, who, in the earnings release, said the “AI revolution is increasing a massive growth opportunity” for the company, and that its “technology, team, and ecosystem are well positioned to continue winning.” During the earnings call, Kurtz reiterated that AI is “driving elevated demand” for the company’s Falcon platform — its cloud-based AI-powered cybersecurity platform — and has become a “key accelerant” for the business. “CrowdStrike is an AI adoption accelerator,” Kurtz explained. “Our customers are safely and securely using more than 1,800 distinct AI applications on their endpoints, which would not be possible without CrowdStrike.” Another point he made is that the adoption of AI creates the need for more cybersecurity. “Every enterprise deploying AI needs an independent protection layer for visibility, compliance, and enforcement. As AI adoption grows, CrowdStrike becomes even more of a necessity to these organizations.” Why we own it Cybersecurity is a must-have for companies in the digital age. Led by co-founder and CEO George Kurtz, CrowdStrike is among 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 weighting: 2.57% Most recent buy: Feb. 3, 2026 Initiation date: Oct. 16, 2024 Finally, Kurtz said the company’s data moat creates a structural advantage. “Delivering cybersecurity at scale requires more than a prompt. It requires expert label telemetry from our global sensors, MDR [managed detection and response] analyst, and elite incident responders. It is a structural advantage no LLM provider can replicate. In addition, agentic cybersecurity requires in-line prevention as well as real-time remediation.” LLMs are not stopping breaches in real time, and when one occurs, every second counts. Kurtz made a compelling argument that we agree with, so why can’t the rest of the market get behind him? If AI is an accelerator for the industry, then why aren’t quarterly beats bigger and guidance even better? The market wants to see material upside. During the Q & A portion of the call, one analyst asked when AI will meaningfully materialize to annual recurring revenue (ARR), a key financial metric for subscription-based businesses. Kurtz’s response was that it is happening today, but we’re still in the early innings. We came away from the quarter reiterating our belief that the cybersecurity industry is in secular growth mode at the top-tier providers and remains insulated from broader macro trends. If anything, the war in the Middle East underscores the need for premier cybersecurity solutions. However, we acknowledge that the AI disruption overhang may persist longer than originally expected, which explains why Jim said during our February Monthly Meeting on Friday that he is waiting to see if the stock moves another leg lower before adding to the position again. We reiterate our 1 rating but are lowering our price target to $500 from $550 to reflect the compression in the group’s price-to-earnings multiple. Quarterly commentary The most notable data point from the quarter was the significant increase in net new annual recurring revenue, which totaled $331 million. That’s above analyst forecasts of about $304 million and represents about 47% year-over-year growth, marking the third straight quarter of acceleration. One opportunity the company spent time discussing on the call was its growing relationship with hyperscalers in cloud security. Management said its leadership with these cloud computing providers differentiates it from other cyber companies. In the past year, CrowdStrike secured almost $1.5 billion in total contract value on the Amazon Web Services marketplace, up 50% year over year. More recently, CrowdSt
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