This Spectacular Artificial Intelligence (AI) Stock Will Be Worth More Than Palantir by 2030

I’ll get the obvious point out of the way up front: CrowdStrike is by no means a cheap stock. Even with the material sell-off that was driven by the security outage over the summer, the stock still trades at a meaningful premium above its peers.

Nevertheless, I see some key differences between an investment in CrowdStrike and one in Palantir.

As I previously explored, CrowdStrike was in rare company a few years ago during the height of the COVID-19 pandemic. In fact, demand for CrowdStrike’s products actually rose during the COVID-19 recession. I see two reasons for this. The obvious reason is that work-from-home protocols became the norm during peak pandemic days. As such, businesses needed to double down on cybersecurity protocols on work-issued devices during this phase of remote work.

However, taking this a step further, I’d argue that CrowdStrike is positioned well during just about any economic cycle because investment in cybersecurity is increasingly becoming a non-negotiable.

In other words, while data analytics is important, Palantir’s value proposition becomes harder to justify during tough times when budgets are tight. In my eyes, the same cannot be said for cybersecurity.

CrowdStrike’s security outage incident occurred on July 19. About a month later, the company reported earnings for its second quarter of fiscal 2025 (ended July 31). To me, the most important figure in that report was annual recurring revenue (ARR), which clocked in at $3.9 billion.

Fast forward to Q3, when CrowdStrike ended the quarter with just over $4 billion in ARR.

Despite any reputational damage from the outage, CrowdStrike has still managed to grow its ARR over the last two quarters. I think this is a testament of the company’s superior products, and the heavy reliance its customers have on CrowdStrike’s security backbone.

At the end of the day, I think both Palantir and CrowdStrike are pricey stocks. However, Palantir’s valuation is stretched and the stock is overbought. As such, the company has to prove that it can grow into this premium valuation — which will be no easy feat given how intense the enterprise software landscape is. Over time, it could become more challenging to compete with existing software providers even if Palantir does have the superior product. Palantir’s ability to scale in the long run could all boil down to pricing compared to competing platforms.

By contrast, I think businesses are going to continue increasing investment in cybersecurity as threats of fraud and ransomware rise and become more sophisticated. Given CrowdStrike’s proven ability to grow during difficult economic times such as recessions as well as challenging business-specific periods (i.e. the outage), I think the company is positioned to accelerate sales, expand margins, and compound profits over the next several years.

For these reasons, I think CrowdStrike has a better chance of experiencing an expanded valuation from current levels and could surpass that of Palantir should the software developer show any sign of protracted growth.

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Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Atlassian, CrowdStrike, Datadog, Fortinet, MongoDB, Okta, Palantir Technologies, ServiceNow, Snowflake, Workday, and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

Prediction: This Spectacular Artificial Intelligence (AI) Stock Will Be Worth More Than Palantir by 2030 was originally published by The Motley Fool