There has been a recent sell-off in software stocks, mainly resulting from Anthropic's innovation that may allow developers to recreate software platforms that businesses pay massive subscriptions to access.
However, some software developments are best left to the professionals, and cybersecurity is one of them. Do you really want to take the chance that your in-house developer created a perfect cybersecurity solution? The risk is too high, so this is an area where cybersecurity stocks are likely safe.
However, they were not safe from the sell-off, so they are now down significantly from their all-time high for no good reason. One of my favorite stocks in this sector is CrowdStrike (CRWD 0.13%), and I think now is an excellent time to scoop up CrowdStrike shares.
Image source: Getty Images.
CrowdStrike has already been deploying AI in its solutions
CrowdStrike's base functionality is endpoint security. A network endpoint is any device that can access a company's network, including laptops or phones. CrowdStrike uses artificial intelligence to detect what is normal activity and what is a threat at an endpoint, and shuts down access once a threat is detected.
With AI working to determine a threat, it makes the response time much faster and active during non-working hours. However, that's just one part of CrowdStrike's solutions.
NASDAQ: CRWD
Key Data Points
CrowdStrike has many more offerings available, and 49% of customers have six or more products from them. CrowdStrike's platform is a cybersecurity ecosystem, and the more products a company uses, the harder it is to switch away. This makes CrowdStrike's business model fairly solid, and I doubt it'll be disrupted by internal developers creating their own cybersecurity software with the help of generative AI.
There's also the consideration of the improvement of cyber threats that are powered by generative AI. The good guys aren't the only ones getting more adept, which is why CrowdStrike expects strong growth over the next few years. It believes the total addressable market in 2026 is $140 billion, but could rise to $300 billion by 2030. That's huge news for its growth potential, which is why any sell-off should be taken as a buying opportunity.
After its recent tumble, CrowdStrike trades for about 22 times sales.
CRWD PS Ratio data by YCharts
That's not necessarily a cheap stock, but it is far more reasonable than the 30 times sales it traded at before the decline that started in October. Wall Street analysts expect 22% growth during its fiscal 2027 (which ends January 2027), a figure that could jump if we see a rise in AI-powered cyberthreats. I think right now is a rare buying opportunity for one of the best cybersecurity investments out there, and investors should scoop up shares while they're still cheap.
