2 Millionaire Stocks In The Making?

CrowdStrike (NASDAQ: CRWD) and SentinelOne (NYSE: S) are cloud-based cybersecurity companies that offer protection from debilitating breaches and cyberattacks.

Both companies are leaders in an industry that was valued at $172.3 billion in 2023 yet investors have gravitated in particular to Crowdstrike, which is up over 400% since the company’s initial public offering (IPO) in 2019.

The momentum has continued over the past year, with Crowdstrike share price up by 150.5% on the back of higher revenue and earnings numbers than forecast.

SentinelOne hasn’t enjoyed quite the same popularity. In fact, the stock is down almost 50% since its IPO in 2021.

S share price hit rock bottom in mid 2023, when a revenue miss sent the stock plummeting by 35.14%. But strong earnings results in subsequent quarters breathed new life into it, and it’s up by 53.24% over the past year.

So which of these two stocks is the better bet?

CrowdStrike Targets $10 Billion Run Rate

Crowdstrike had been trending somewhat lower before the company released its earnings results for the 4th quarter of 2023. But the stock popped over 10% subsequent to the earnings call following a revenue and earnings beat. Management also reiterated the ambitious intention to reach $10 billion in annual recurring revenue (ARR) by 2030.

The company still has a ways to go. In the 4th quarter, the leadership team reported ARR of $3.44 billion, a 34% improvement from 2022’s results. Revenue of $845.3 million also outperformed estimates by 0.64%.

CrowdStrike has been profitable for three straight quarters now, and GAAP net income of $53.7 million was a welcome change from the $47.5 million net loss in the same quarter of 2022. Diluted earnings per share (EPS) of $0.95 beat EPS estimates of $0.92 by 15.3%. Revenue growth and earnings beats might have been enough to satisfy investors.

The company also announced that it will acquire Flow Security for an undisclosed amount. The purchase will bring Flow’s data security posture management software to CrowdStrike’s Falcon Platform. The acquisition news comes on the heels of September news that Crowdstrike planned to buy Bionic for about $350 million.

SentinelOne Closing In On $1 Billion Top Line 

SentinelOne hasn’t made splashy acquisitions, but the company may have a head start on integrating artificial intelligence (AI) into cybersecurity software.

The AI agent in SentinelOne’s Singularity platform can proactively identify and neutralize threats without the need for human intervention. The demand for the company’s software has bloomed, and translated to soaring revenue, which was up 38% year-over-year for the 4th quarter of fiscal year 2024 (ended January 31).

Revenue of $174.2 million beat expectations by 2.83%, and ARR was up 39% to $724.4 million over the prior quarter. SentinelOne hasn’t yet reached profitability, but the net loss of $72 million was 23.16% better than last year. EPS beat analysts’ forecasts by over 52%.

Despite the loss, SentinelOne still has cash and cash equivalents of $1.1 billion as of the end of the quarter. The company reported full-fiscal-year revenue growth of 47% to $621.2 million. For fiscal year 2025, SentinelOne expects revenues of between $812 and $818 million, an increase of over 30%.

Despite the strong quarter, SentinelOne shares fell by over 20% after the earnings call. Investors were concerned about the company’s stagnant margin forecast for the upcoming fiscal year.

Analysts View On SentinelOne and CrowdStrike 

Analysts remain largely bullish on SentinelOne. Out of 33 analysts, 19 rate it is as a Buy at this price point, and 2 of those analysts forecast that the stock will outperform the market. The highest projection has SentinelOne share price reaching $40 per share, a 76.4% increase from present levels.

The average price target is $29.82 per share, which corresponds to a 31.5% increase over the next year. The remaining 14 analysts rate SentinelOne as a Hold, and 2 have placed Underperform ratings on the stock. The lowest forecast estimates a gain of 5.8% to $24 per share.

While research analysts are still mostly in SentinelOne’s corner, they are even more positive on Crowdstrike which enjoys 44 buy ratings. 6 have designated Crowdstrike as an Outperform candidate. The highest price target is $435 per share, a 35% gain from where the stock currently trades.

The average forecast projects $396.60 per share, a 23% increase from current price levels. There are 4 Hold ratings and no sell ratings. The lowest forecast has the stock dropping by 16% to $271 per share over the next year.

SentinelOne Vs CrowdStrike Stock?

According to analysts, SentinelOne is the better stock now with 27.5% upside to fair value of $29.71 per share versus Crowdstrike that has 24.5% upside potential to $390.31 per share.

Notably, the discounted cash flow forecasts for both stocks are more pessimistic. For example, Crowdstrike fair value sits closer to $265 per share while SentinelOne has downside potential to $22 per share.

Sentiment has clearly shifted more negatively for SentinelOne with 18 analysts revising their guidance lower for the upcoming quarter.

By contrast, 32 analysts have revised their estimates higher for Crowdstrike over the same time period.

Are S and CRWD Millionaire Stocks In The Making?

It’s not a foregone conclusion at this point. What does seem more certain now is that the cybersecurity industry will grow at a rapid pace and that SentinelOne and CrowdStrike are both well positioned for future success. CrowdStrike has already made early investors very wealthy and the signs are positive for the future too, especially over the long-term.

It may not continue at its past pace, but there are plenty of reasons to believe that it will outperform the market at large. Healthy cash flow and large acquisitions should keep the company to the forefront of both the industry and the minds of investors. The company has continued to beat expectations but there is no sign that will slow down soon.

SentinelOne also beat estimates for the last three quarters, and the stock is trading at a cheaper valuation than CRWD. SentinelOne stock is certainly a strong alternative for investors who feel they missed the boat on Crowdstrike and are looking for a cybersecurity stock with AI integration.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.