CrowdStrike stock rose 20% in August. Here’s why the gains could continue in September.

July 19 was a fateful day for CrowdStrike (CRWD -3.85%) investors. The company released a routine update to its cybersecurity software that had a flaw and sent about 8.5 million Windows-based computers crashing. The outage cost CrowdStrike’s biggest customers — from airlines to banks — an estimated $5.4 billion.

By Aug. 2, CrowdStrike shares had plunged 36 percent to a low of $218 as investors feared the incident would lead to an exodus of customers and a substantial drop in the company’s revenue. But the stock bounced back in August with a 20% gain for the month overall as the fallout appears to be less damaging than initially anticipated.

This was reinforced by CrowdStrike’s Aug. 28 announcement for the second fiscal quarter of 2025 (ended July 31), when CEO George Kurtz told investors that many future customer contracts will likely be delayed rather than canceled . So here’s why CrowdStrike stock could continue to rise in September (and potentially beyond).

CrowdStrike is still a leader in cyber security

The cybersecurity industry has a history of fragmentation, meaning different vendors specialize in different product segments. This has left companies to reassemble their cyber security stack from multiple vendors. However, the CrowdStrike Falcon platform is unique in that it is capable of meeting all of an organization’s cybersecurity needs.

Artificial intelligence (AI) has been at the heart of Falcon for more than a decade, facilitating automation across the entire platform. This is critical as cyber attacks are increasing in both sophistication and frequency, and human managers simply cannot keep up with the high volume of alerts.

CrowdStrike’s AI models are trained on more than 2 trillion security events every day and make 180 million attack indicator decisions every second to determine the intent of a potential threat. In other words, the company’s AI models are constantly improving to become faster and more accurate in identifying and responding to incidents.

In addition, last year CrowdStrike launched Charlotte AI, which is a virtual assistant built into Falcon. It can be prompted to instantly search for threats and reduces the need for employees to manually investigate each security alert. CrowdStrike says customers save an average of two hours a day thanks to Charlotte AI as it adds another level of automation to the Falcon.

Falcon has 28 modules for cloud security, identity protection, endpoint security and more. During the second quarter, CrowdStrike said 65 percent of its customers were using at least five modules. In addition, the number of deals signed for eight or more modules (which is where spending really rises) increased by 66% year-over-year, highlighting the growing need for cybersecurity, especially among larger and more complex organizations.

Image source: Getty Images.

CrowdStrike’s Q2 revenue beat expectations

CrowdStrike generated $963.9 million in revenue in Q2, which was a 32% increase over the year-ago period. It was also above the upper end of management’s forecast ($961.2 million), suggesting there wasn’t much financial impact from the disruption during the quarter.

Perhaps that’s not surprising since the outage came with less than two weeks left in the quarter. However, management’s outlook for the full fiscal year 2025 (ended January 31, 2025) also indicates a relatively small impact. The team initially expected to generate $4 billion in revenue for the year, which it revised down by just 2.5 percent to $3.9 billion. That result would still represent 27.5% revenue growth from fiscal 2024, which, on balance, is good news for investors.

As we touched on above, the company’s CEO said that some of the deals that were supposed to close at the end of the second quarter have been pushed into future quarters, but the “vast majority” of them remain in the works. In other words, it appears potential customers have paused to make sure CrowdStrike’s issues are resolved before putting pen to paper, but few plan to walk away entirely.

Looking longer term, despite the recent issues, the company actually reiterated its goal of reaching $10 billion in annual recurring revenue (ARR) by fiscal 2031. It had $3.86 billion in ARR at the end of the second quarter , so this target would represent a staggering 159% growth over the next six years.

CrowdStrike stock is still expensive, but less so than before

CrowdStrike generated $47 million in net revenue in Q2, which was a staggering 455% year-over-year growth. But the company was breaking even just a year ago, so it’s still relatively early in its journey to profitability. That means it’s more appropriate (for now) to value it using the price-to-sales (P/S) ratio, which focuses on earnings instead.

Based on CrowdStrike’s trailing 12-month revenue of $3.5 billion and the company’s market cap of $67.5 billion, its stock trades at a P/S ratio of about 19. That’s down significantly compared to July when it was close to 30, but it is still relatively expensive. to its main rival, Palo Alto Networkswhich trades at a P/S ratio of 15.9:

CRWD PS report data by YCharts

CrowdStrike deserves a premium P/S ratio in this case, its revenue grew 32% last quarter, while Palo Alto’s revenue grew just 12%. However, if there’s any unexpected fallout from the July 19 incident that forces management to further cut its fiscal 2025 revenue guidance, investors may reconsider the valuation they’re willing to pay for CrowdStrike stock.

That said, based on the data available today, I think the stock can build on August’s 20% gain and continue its recovery in September. If a 2.5% decline in fiscal 2025 revenue forecasts is as bad as this situation gets, there’s every chance CrowdStrike stock will return to its all-time high of $390 in the next year or so. Another upside could be in the future as the company moves closer to its $10 billion ARR goal.