CrowdStrike shares fell 8% after quarterly forecasts missed investor expectations, despite demand for AI-powered cybersecurity software. The company's market valuation could shrink by $14 billion if losses persist. Analysts noted elevated expectations following a significant rally.
CrowdStrike shares slid 8% on Thursday after the company's quarterly forecasts failed to meet steep investor expectations, despite demand for cybersecurity software being buoyed by Anthropic's announcement of its Mythos AI model. If the losses persist, the cybersecurity firm's $190.29 billion market valuation would shrink by $14 billion. Some analysts attributed the selloff to profit-taking by investors, as CrowdStrike shares had soared about 90% since the company's last earnings report in March. As of Wednesday's close, the stock was nearly 60% higher this year. CrowdStrike, like its peers such as Palo Alto Networks, has benefited from strong demand for its AI-powered cybersecurity software. CrowdStrike CEO George Kurtz stated that the Mythos moment proved that AI needs a cybersecurity ecosystem. However, analysts suggest investors sought even stronger growth. CrowdStrike shares traded at 137.74 times their estimated earnings for the next 12 months, compared with 68.91 times for Palo Alto Networks. Following the results, at least 19 brokerages raised price targets on the stock, while one cut its target. Morgan Stanley analysts noted that while near-term expectations may have been elevated following the recent rally, they continue to see room for further multiple expansion.
The stock's decline highlights the challenge for high-growth tech companies to consistently meet elevated investor expectations, particularly in the AI-driven cybersecurity sector, and signals potential profit-taking after significant rallies.