10 billion reasons why CrowdStrike is a buy right now

CrowdStrike (CRWD 8.10%) is being scrutinized by some investors for its failure on July 19 when it pushed an update that crashed millions of devices. The stock sold off strongly following that event, but the damage caused by that incident did not affect his business much.

Due to the impact of the event, the stock is on sale, so it may be time to add some CrowdStrike shares. I think there are 10 billion reasons why this could be a good idea because cyber security has never been more important.

The CrowdStrike platform is highly integrated

CrowdStrike is a leader in cyber security. Its platform helps protect against external threats by securing network endpoints. This keeps internal servers secure, preventing malicious takeovers or data theft. Endpoint protection is only one part of CrowdStrike’s offering. It also has cloud protection, threat intelligence and identity protection tools. In total, the CrowdStrike platform has 28 modules that customers can select to provide different levels of protection.

With 65% of customers using at least five modules, CrowdStrike is deeply integrated into its customer’s security strategy. This is why CrowdStrike didn’t suffer as big a fallout as some feared; it’s hard software to live without.

CrowdStrike’s software is best-in-class in several categories, and while it had one failure, it didn’t bring down the entire business.

CrowdStrike’s growth figures for fiscal 2025 were hardly affected by the outage

Although the attack did not occur until the end of CrowdStrike’s fiscal 2025 second quarter (ended July 31), if it had had a massive effect, it would have appeared in the third quarter and in CrowdStrike’s full-year outlook . For Q3, CrowdStrike expected about $982 million in revenue, up 25% from a year ago. That’s a slight slowdown compared to Q2’s 32% rise, but not enough to send every investor running for the exits.

For fiscal 2025, CrowdStrike’s management lowered its guidance from what it said in Q1. In the first quarter, it issued guidance of $3.99 billion for fiscal 2025. That number was updated in Q2 by management to reflect some of the difficulties it was experiencing, but it only fell to $3.90 billion of dollars.

This shows that CrowdStrike escaped this incident relatively unscathed, giving investors the green light to look to buy more. If CrowdStrike can achieve management’s long-term goals, the stock could be a bargain right now.

CrowdStrike may still be a market-beating stock

In his Q1 FY 2025 earnings call, CEO and co-founder George Kurtz discussed CrowdStrike’s vision of achieving $10 billion in recurring annual revenue within five to seven years. That’s a massive increase, but given that cybersecurity has never been more important, it’s not as outlandish as some might think.

But what would that do for the stock?

Let’s take the conservative estimate and say CrowdStrike reaches $10 billion in annual recurring revenue in seven years. If it can do that and achieve a 30% profit margin (a very reasonable level to expect for a software company), CrowdStrike will produce $3 billion in annual earnings.

At today’s valuation of $65.5 billion, CrowdStrike’s stock would be valued at about 22 times its trailing seven-year earnings. The industry standard in software is Adobewhich has historically traded for nearly 50 times trailing earnings.

So if CrowdStrike achieves these goals in seven years, the stock would reach a historically normal valuation and have a compound annual growth rate of 12.4%. That was over seven years, the long end of the estimate. If it does it faster than that, CrowdStrike could earn an even higher rate of return, giving investors 10 billion good reasons to buy the stock.

With that figure higher than the market’s long-term average return, CrowdStrike looks like a strong long-term buy, even if it’s a little expensive right now.