Why This Analyst Sees Nearly 40% Upside To CrowdStrike Stock Despite High Valuation?

Piper Sandler has revised its rating for cybersecurity firm CrowdStrike Holdings (NASDAQ:CRWD), identifying artificial intelligence (AI) as a significant growth catalyst rather than a threat.

Analyst Rob Owens upgraded CrowdStrike from neutral to overweight and also established a new price target of $520, indicating a nearly 40% upside from the previous Friday’s closing price, reported CNBC

Owens suggests that the recent year-to-date decline in CrowdStrike’s shares, fueled by AI-related bearish sentiments, is an overreaction. He perceives AI as an opportunity for the cybersecurity firm, not a threat.

The analyst pointed out that despite CrowdStrike’s innovation history and execution capability, justifies its high valuation. He identifies the consolidation of the fragmented security market as a significant tailwind for CrowdStrike.

The analyst also commended CrowdStrike’s strategic acquisitions over the past year, aimed at boosting next-generation AI and fortifying its identity security offerings. He believes that CrowdStrike's $1.4 billion in investments strategically position the company to seize the emerging identity market, an opportunity that, he argues, investors have yet to fully recognize.

AI Boosts Software, Not Replaces SaaS

CrowdStrike shares were impacted after Anthropic launched Claude Code Security last Friday. This AI tool detects subtle, high-severity code vulnerabilities and suggests fixes, aiming to help security teams spot issues that traditional scanners often overlook.

However, HSBC, last week, dismissed fears of AI replacing the software-as-a-service (SaaS) sector, predicting that software would benefit from AI's development. The firm emphasized that depending on AI to develop in-house software would be neither practical nor cost-effective for companies.

“Software is already eating AI” and would continue to do so, said HSBC.

CrowdStrike Expands AI Protection

CrowdStrike’s strategic partnership with VAST Data is set to enhance security for companies using AI. The companies plan to combine data-layer governance with enterprise threat detection, securing the full AI lifecycle. CEO George Kurtz emphasized that as AI becomes the backbone of modern enterprises, strong data-layer security is essential.

In Q3, CrowdStrike posted strong growth and raised guidance, citing broad strength across endpoint, cloud security, next-gen identity, and SIEM. Its Falcon Flex subscription exceeded $1.35 billion in ARR, up over 200% year-over-year.

Benzinga's Edge Rankings place CrowdStrike in the 18th percentile for momentum. It has a weak price trend across the short, medium and long term. Benzinga’s screener allows you to compare CrowdStrike’s performance with its peers.  

CRWD Price Action: On a year-to-date basis, CRWD stock declined 17.99%, as per Benzinga Pro. On Friday, it fell 2.39% to close at $371.98.

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