Shares of cybersecurity company CrowdStrike (NASDAQ:CRWD) jumped 8.5% in the afternoon session as the debate around the future of AI continues following the unveiling of DeepSeek. The market is recalibrating and rotating to stocks that are not only more insulated if DeepSeek prevails in the AI arms race but to stocks that may actually benefit no matter who wins that race. The proliferation of AI will be a general tailwind to demand for cybersecurity, big data, and automation software.
For example, AI can make bad actors better and make the search for vulnerabilities faster. This means that enterprises will need more of what CrowdStrike, Zscaler, or Cloudflare offer. Additionally, more data is only valuable if the mountains of numbers, text, and videos can lead to actionable insights. AI can do exactly that, meaning that enterprises will get more value from platforms like Snowflake and MongoDB. Similarly, AI can make automation software more valuable by making it more adaptive, which means that customers can extract more value from platforms like ServiceNow and Appian.
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CrowdStrike’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 25.2% on the news that the company reported fourth-quarter results with revenue and ARR (annual recurring revenue) beating by a slight margin but very convincingly on operating profit. Keeping with that theme, while forward guidance for the next quarter and the full year were only slightly above expectations, non-GAAP EPS guidance was more convincingly ahead, showing better-than-expected profitability.
Lastly, Palo Alto Networks (NASDAQ:PANW) warned of weakness in security spending earlier when it reported earnings, sending waves of caution across the sector. Cybersecurity peers that reported after Palo Alto put up mixed results, which kept investors on edge for CrowdStrike’s results. These results could signal a shift in sentiment given CrowdStrike’s popularity within the cyber security space, especially considering its cloud security capabilities.
CrowdStrike is up 16.4% since the beginning of the year, and at $404.19 per share, has set a new 52-week high. Investors who bought $1,000 worth of CrowdStrike’s shares 5 years ago would now be looking at an investment worth $6,843.
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