Cybersecurity Shares Falter as AI Fails to Provide Boost Today
**Cybersecurity Giants CrowdStrike and Okta Post Mixed Results, Reflecting Market Mood**
The current market outlook for CrowdStrike Holdings (CRWD) and Okta (OKTA) reflects mixed but generally positive sentiments, although both stocks experienced declines after their latest earnings reports due to specific company factors.
### CrowdStrike Holdings (CRWD)
CrowdStrike's stock closed recently around $513, near its 52-week high, showing strong short-term momentum and potential for further upside in the near term, with possible resistance around $520-$530. The company is highly valued with a market cap of about $128 billion but is currently unprofitable, reflected in a negative EPS and an inverted P/E ratio. Analysts maintain a bullish consensus with most recommending a "Buy," but the average 12-month price target of around $427 suggests expectations for a price correction to more reasonable valuation levels based on fundamentals. Some bullish views remain, especially from Wedbush, forecasting a rally of up to 15% driven by growth in cybersecurity demand and revenue expansion.
However, CrowdStrike’s stock dropped about 6% after its recent earnings report due to weaker guidance for the next quarter and a technical indicator (MACD divergence) signaling possible near-term decline. It is also navigating challenges from a past global IT outage that has pressured profit margins and caused some reputational damage. Despite strong cash flows and growth potential, these factors prompted profit-taking and reduced investor enthusiasm immediately after earnings.
### Okta (OKTA)
Okta’s stock has performed well in 2025, rising about 59.3% year to date and trading around $125.54. It is considered more attractively valued than CrowdStrike, trading at a forward sales multiple of 5.87X compared to the cybersecurity industry average of 14.51X. Analysts rate Okta with a moderate "Buy" consensus, supported by strong earnings growth potential, particularly due to its focus on AI-driven identity tools and robust partner ecosystem growth.
While specific recent earnings reactions for Okta were not detailed explicitly in the sources, Okta's strong quarterly earnings beat (EPS of $0.31 versus $0.22 expected) and continued momentum suggest investor confidence. Any post-earnings stock decline, if it occurred, would likely stem from broader market factors or near-term profit-taking rather than company-specific weaknesses like CrowdStrike’s earnings guidance miss or outage-related issues.
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### Summary Table
| Aspect | CrowdStrike (CRWD) | Okta (OKTA) | |-------------------------|------------------------------------------------|-------------------------------------------------| | Recent Stock Price | ~$513 (near 52-week high) | ~$125.54 | | 2025 YTD Performance | +39.2% | +59.3% | | Valuation Metrics | Overvalued (DCF intrinsic value ~$371 vs price $513); Negative EPS | More reasonably valued; forward sales multiple 5.87X (below industry average) | | Analyst Consensus | Mostly Buy, average price target ~$427 (lower than current price) | Moderate Buy consensus | | Earnings Impact | Stock dropped 6% post-earnings due to weak guidance & reputational issues | Earnings beat estimates; continued investor confidence | | Growth Drivers | AI and ML cybersecurity capabilities; strong market share growth | AI-driven identity tools; strong partner ecosystem | | Risks | Profit margin pressure, reputational damage from IT outage | Less valuation pressure, stronger earnings outlook |
### Conclusion
CrowdStrike’s stock decline after earnings reflects investor concerns over weaker near-term guidance and lingering reputational issues despite long-term growth potential. In contrast, Okta enjoys a more favorable valuation and stronger earnings momentum, making it a more attractive growth pick in cybersecurity currently. Both companies remain key players in a rapidly growing sector, but market participants are weighing short-term execution risks and valuation levels differently.
Additional reporting revealed that CrowdStrike's adjusted net income for the fiscal first quarter was $136 million, up 82% from year-ago levels, and its revenue guidance for the full 2024 fiscal year is between $3 billion and $3.04 billion. Okta's revenue for the fiscal first quarter was $518 million, up 25% year over year, and its adjusted net income was $38 million. Okta's full-year fiscal 2024 revenue guidance is between $2.175 billion and $2.185 billion.
In the after-hours trading, CrowdStrike Holdings' shares decreased more than 11%, and Okta's shares lost 15% of their value. The Nasdaq Composite (^IXIC) posted a daily point change of unspecified value, while the S&P 500 had a daily point change of 26. The Dow Jones Industrial Average (^DJI) had a daily point change of -135, and the Nasdaq Composite (^IXIC) had a daily percentage change of 0.63%. The S&P 500 had a daily percentage change of 0.61%, and the Nasdaq Composite (^IXIC) finished the month of May with gains, while the S&P 500 gave back a portion of its recent gains for the month.
In the realm of finance and investing, both CrowdStrike and Okta, two significant players in the technology and cybersecurity sector, have experienced contrasting outcomes following their latest earnings reports. While CrowdStrike's stock declined due to weaker guidance and lingering reputational issues, Okta's shares remained resilient, driven by a more favorable valuation and stronger earnings momentum. This highlights the importance of cybersecurity and technology in today's markets, as well as the influence of investing strategies centered on technology growth and valuation analysis. Additionally, these companies' financial performance data, such as revenue growth and adjusted net income, provide an insight into their financial health and potential for future investing opportunities in the ever-expanding technology and cybersecurity landscape.
