CrowdStrike’s AI Security Boom May Still Have Room to Run

AI adoption is driving a surge in cybersecurity spending, with companies focusing on securing AI agents, applications, and cloud workloads. CrowdStrike Holdings (CRWD) is capitalizing on this trend, experiencing record net new ARR of $333 million in Q2 2027, a 51% year-over-year increase. The company has raised its FY27 net new ARR growth guidance to 34%, with revenue rising 26% to $1.47 billion.

Scotiabank has increased its price objective on CRWD to $250 from $227, maintaining a Sector Outperform rating. The firm sees enterprise demand and increased spending on AI security as key growth drivers.

Falcon Flex ARR crossed $2.29 billion, up 101% year-over-year, and 51% of subscription customers now use six or more modules. Growth is expected to be fueled by cross-selling, AI security adoption, and record free cash flow. However, bears caution that valuation is the biggest risk, with CrowdStrike trading at a forward P/E of ~172.4x, significantly higher than Palo Alto Networks' ~87.7x.

Despite strong ARR growth and an expanding Falcon platform, competition could intensify if ARR growth slows, module adoption disappoints, or valuation compresses. CrowdStrike's presence across various cybersecurity segments cements its position as the consolidated cybersecurity platform, with a slightly stronger investor confidence compared to Palo Alto Networks.