The Nasdaq Composite (^IXIC 0.59%) includes almost every company listed on the Nasdaq stock exchange, so it's often a good proxy for the performance of the broader technology industry. As of the close on Friday, April 5, the index was down by 22% from its all-time high, which officially places it in a bear market.
The sharp sell-off was triggered by President Donald Trump's tariff announcement last week, which will raise the price of all imported goods flowing into the U.S. Countries including China have already implemented tariffs in retaliation, so investors are concerned about the possibility of a global trade war, which could hurt economic growth.
That would be a bad thing for all American companies, but some could suffer a lesser impact than others because they aren't directly subject to tariffs.
For example, software and digital products were excluded from Trump's initial round of penalties, so companies like CrowdStrike Holdings (CRWD +3.80%) and Duolingo (DUOL 2.11%) should remain mostly unscathed (for now). Here's why investors with a spare $650 might want to buy one share in each of them during the Nasdaq bear market, with the intention of holding on for the long term.
The case for CrowdStrike
CrowdStrike is one of the world's largest cybersecurity companies. Its Falcon platform is a rare all-in-one solution for businesses, featuring 29 modules that protect cloud networks, employee identities, endpoints (computers and devices), and more. Falcon uses artificial intelligence (AI) to autonomously detect and neutralize threats, creating a seamless user experience especially for businesses without in-house cybersecurity managers.
Its AI models are trained on 2 trillion security events each day, and they make 180 million indicator-of-attack (IoA) decisions every single second. An IoA is a pre-breach signal that often precedes a serious attack, so the more of these Falcon sees, the smarter its AI models become over time.
NASDAQ: CRWD
Key Data Points
At the end of CrowdStrike's fiscal year 2025 (Jan. 31), a record 67% of Falcon customers were using five modules or more, which was up from 64% in the prior-year period. It highlights how businesses need an expanding number of products to protect themselves as they shift more of their operations online.
The company ended fiscal 2025 with $4.2 billion in annual recurring revenue (ARR), which was a 23% increase from the prior year. Since its stock has declined 29% from its recent all-time high, its price-to-sales ratio (P/S) is now just 20.2, which is roughly in line with its three-year average:
CRWD PS Ratio data by YCharts.
Perhaps that doesn't sound like a great deal to investors, but consider this: Management has issued a long-term forecast that suggests CrowdStrike can grow its ARR to $10 billion by fiscal 2031. In other words, those who buy the stock today could earn a 138% return over the next six years even if its P/S remains exactly where it is today.
Moreover, there could be upside to that forecast considering $10 billion in ARR would represent only a small fraction of CrowdStrike's addressable market, which the company predicts will grow to $250 billion over the next few years.
Image source: Getty Images.
The case for Duolingo
Duolingo operates the world's largest digital language-education platform. It takes the learning experience out of the classroom and places highly interactive lessons at the fingertips of anybody with a smartphone. A record 116.7 million people were using Duolingo every month at the end of 2024, a 32% increase from the year before.
Duolingo monetizes its platform in two ways: It shows ads to free users during their lessons, and some users pay a monthly subscription fee to unlock added features that speed up their learning. Around 9.5 million users were subscribers at the end of 2024, which represented 42% year-over-year growth, and AI is one of the things convincing free users to pay.
In 2023, Duolingo launched a new subscription tier called Max, which introduced two AI-powered features: Explain My Answer, which provides personalized feedback to each user based on their mistakes, and Roleplay, which allows users to practice their conversational skills through a chatbot interface.
Last year, Duolingo expanded Max even further with Video Call, which features a digital avatar named Lily that can help users practice their speaking skills in a foreign language of their choice.
The Max tier already accounts for 5% of Duolingo's total subscriber base, and it's a step toward management's goal to deliver a learning experience that rivals a human tutor.
NASDAQ: DUOL
Key Data Points
The rapid growth in paying users drove Duolingo's revenue to a record high of $748 million in 2024. It was a 41% increase compared to 2023, and it exceeded the company's guidance of $744 million (which management had raised three times throughout the year). Plus, thanks to careful expense management, the company delivered record net income of $88.5 million, a 451% year-over-year increase.
The stock isn't necessarily cheap right now despite its recent 33% decline. Based on the company's 2024 revenue, it trades at a price-to-sales ratio of 18.5, a premium to its three-year average of 15.1. However, Duolingo is growing so fast that if we look ahead to 2026, Wall Street's average revenue forecast places the stock at a forward P/S of just 10.8:
DUOL PS Ratio data by YCharts.
In other words, the stock would have to rise by 40% by the end of 2026 just to trade in line with its average P/S over the last three years. As a result, considering Duolingo isn't directly exposed to the tariff turmoil (for now), this might be a great buying opportunity.
