CrowdStrike Stock Rises 52% in 3 Months: Time to Hold or Book Profits?

Globe and Mail

09-06-2025

CrowdStrike Holdings CRWD shares have soared 51.7% over the past three months, outperforming the Zacks Security industry's 23.5% growth. The stock has also exceeded the returns of other industry peers, including CyberArk Software CYBR, Palo Alto Networks PANW and Check Point Software CHKP. In the past three months, shares of CyberArk, Palo Alto Networks and Check Point Software have gained 29.1%, 14.8% and 3.6%, respectively.
CrowdStrike has been benefiting from strong enterprise demand for artificial intelligence (AI)-native cybersecurity solutions, platform consolidation, and rapid adoption of its Falcon Flex model, as organizations modernize security operations in an increasingly AI-driven threat landscape. However, the stock's sharp rise in the past three months raises the question: Does the stock still have upside potential left and is it worth holding or is it time to book profits? Let's see.
3 Month Price Return Performance
AI Integration Helps CRWD Scale Subscription Revenues
CrowdStrike's subscription business model is driving its overall top-line performance. The company's quarterly revenues crossed the $1 billion mark for the third consecutive time during the first quarter of fiscal 2026 and marked a year-over-year improvement of nearly 21%. was partly achieved due to the Falcon Flex Subscription Model, which allows customers to commit upfront and later choose modules, eliminating procurement friction.
CrowdStrike's subscription customers, who adopted six or more cloud modules, represented 48% of the total subscription customers at the end of the first quarter. Those with seven or more cloud modules accounted for 32%, and those with eight or more cloud modules represented 22% as of April 30, 2025.
CRWD's Falcon platform is gaining popularity as an 'AI-native SOC,' with strong adoption in Charlotte AI Agentic Detection Triage, Workflows and Response. CrowdStrike is partnering with other AI companies to expand its capabilities.
CrowdStrike integrated its Falcon cybersecurity platform into NVIDIA's Enterprise AI Factory to enable enterprises to secure their AI systems, covering data ingestion, model training, and deployment. The company also collaborated with Microsoft to standardize cyber threat attribution across vendors. New introductions, including AI Model Scanning and AI Security Dashboard by CRWD, along with its strong partnerships, will likely help the company gain more customers.
Falcon Flex: A Game-Changer Solution for CrowdStrike
A significant driver of CrowdStrike's customer growth is the Falcon Flex subscription model, which simplifies security adoption by offering modular, scalable cybersecurity solutions. This flexibility encourages long-term commitments, ensuring steady revenue growth and deep customer integration.
The company ended the first quarter with $4.44 billion in ARR, up 22% on a year-over-year basis. The robust growth in Falcon Flex's customer adoption and deal value is driving CrowdStrike's total ARR. During the first quarter of fiscal 2026, CrowdStrike added $774 million of total Falcon Flex account value, bringing the total deal value of accounts that have adopted Falcon Flex to $3.2 billion.
At the end of the first quarter, more than 820 customer accounts have adopted the Falcon Flex model. CrowdStrike achieved the $3.2 billion deal value milestone within two years since its launch, and represents a robust growth of 31% sequentially and more than six times year over year.
In addition to strong module adoption rates, CrowdStrike is securing major platform expansion deals through Falcon Flex. A Fortune 100 technology company expanded its relationship with CrowdStrike from a $12 million EDR (endpoint detection and response) deal into a $100 million-plus, five-year Falcon Flex agreement, covering cloud, identity, Next-Gen SIEM, and endpoint protection. Also, GuidePoint Security became CrowdStrike's fifth partner to surpass $1 billion in total deal value mark, joining AWS, Optiv, CDW, and SHI, reinforcing the strength of its ecosystem-driven growth.
A large healthcare provider signed an 8-figure Falcon Flex expansion centered on Charlotte AI and CrowdStrike's Next-Gen SIEM, supporting the customer's full transformation to an AI-native SOC. As Flex gains further traction, CrowdStrike appears well-positioned to achieve its longer-term goal of $10 billion in ARR. If current trends hold, Falcon Flex may well be the game-changer that redefines the company's revenue growth trajectory
CrowdStrike's Rising Expenses Weigh on Profitability
To survive in the highly competitive cybersecurity market, each player must continuously invest in broadening its capabilities. Over the past few years, CrowdStrike has invested heavily to enhance its sales and marketing (S&M) capabilities, particularly by increasing the sales force. As a result, its sales and marketing expenses flared up nearly ninefold to $1.52 billion in fiscal 2025 from $173 million in fiscal 2019.
Additionally, investment in research & development (R&D) is a top priority for CrowdStrike. Over the last six fiscals, the company has increased its R&D expenses 12-fold to improve the design, architecture, operation and quality of its cloud platform.
In the first quarter of fiscal 2026, S&M and R&D expenses soared 25.5% and 34.7%, respectively, year over year. Though the firm foresees these investments to garner benefits over the long run, higher expenses are weighing on the company's bottom-line results. First-quarter non-GAAP earnings declined 7.6% year over year to 73 cents per share.
Increasing costs are likely to continue impacting CrowdStrike's bottom-line performance in the near term, as reflected in the Zacks Consensus Estimate.(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Image Source: Zacks Investment Research
CrowdStrike Trades at a Premium Valuation
CrowdStrike is currently trading at a high price-to-sales (P/S) multiple, far above the Zacks Security industry. CrowdStrike's forward 12-month P/S ratio sits at 22.60X, significantly higher than the Zacks Security industry's forward 12-month P/S ratio of 14.78X.
Forward 12 Month P/S Ratio
Image Source: Zacks Investment Research
CRWD stock also trades at a higher P/S multiple compared with other industry peers, including CyberArk, Palo Alto Networks and Check Point Software. At present, CyberArk, Palo Alto Networks and Check Point Software have P/S multiples of 13.96X, 12.94X and 9.25X, respectively.
Conclusion: Hold CrowdStrike Stock Now
As businesses continue prioritizing AI-driven cybersecurity solutions, CrowdStrike's leadership in threat prevention, response and recovery will only strengthen. However, shrinking profits and premium valuation warrant a cautious approach to the stock. So, it is prudent for existing investors to remain invested, while new investors should wait for a better entry point.
CrowdStrike currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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