Wolfe Research Lifts CrowdStrike on Anticipation of Anthropic AI Boost

Wolfe Research took a fresh look at CrowdStrike Holdings Inc (NASDAQ: CRWD) and pushed it up from "peer perform" to "outperform." This move comes on the heels of an expected new AI launch by Anthropic, which analysts see as a potential accelerant for cybersecurity budgets.

The stock's pre-market jump of about 3% reflects some optimism, though it hasn't been all smooth sailing. Earlier, the shares dropped around 6% after rumors about Anthropic's next AI model, dubbed Mythos, surfaced. Still, even with recent headwinds, CrowdStrike is holding up better than its sector benchmark, the IGV ETF, with a 21% drop versus the sector's 27% decline year-to-date.

Wolfe Research argues that when signs of conflict appear, companies don't cut back on security-they ramp it up. According to the analysts, the current climate is unlikely to slow down security spending over the next year and could even prompt companies to fortify their defenses more aggressively.

On valuation, the new $450 price target implies forward revenue and free cash flow multiples that slightly exceed CrowdStrike's recent three-year averages, but notably, current multiples sit below those historical norms. This suggests the shares might be trading at a discount compared to their typical valuation range.

Looking further ahead, Wolfe's models predict an uptick in annual recurring revenue (ARR) growth to 25.5% in fiscal 2027, a bit ahead of what the company itself anticipates. Additionally, net new ARR could grow significantly faster this year than previously guided, before slowing down in the following years.

Diving into the product line-up, they expect the LogScale Next-Gen SIEM segment to see a sharp rise in ARR, while areas like Identity and Cloud Security also show strong forecasted growth. Notably, Core Endpoint ARR is projected to become a smaller share of total ARR as other products gain traction.

Surveys conducted by Wolfe Research reveal that CrowdStrike currently tops the list for Chief Information Security Officers when it comes to where they plan to allocate the biggest chunk of their budget in 2026. Another survey highlighted that an overwhelming majority of respondents plan to boost spending on AI and machine learning security tools, outpacing other cybersecurity segments by a considerable margin.

There's a cautionary flag too: Wolfe notes that the official rollout of Anthropic's new model, expected soon, could momentarily rattle the stock. Plus, risks loom if rival AI entrants eat into cybersecurity turf, or if growth in emerging product areas doesn't keep pace with projections.

In the end, Wolfe's upgrade frames CrowdStrike as a tech player potentially set to ride the AI-driven wave in cybersecurity spending, offering a mix of growth potential and valuation dynamics that won't go unnoticed by market watchers.