Okta’s latest quarter and guidance
Okta (OKTA) just reported second quarter results that included higher revenue and net income and raised its full year revenue outlook, while also calling out progress in AI security and its core identity platforms.
The company recently closed the acquisition of Permiso to support its AI security roadmap and is pointing to customer interest around new offerings such as Okta for AI Agents Core and identity threat protection products.
Okta’s recent earnings beat and raised revenue outlook have come alongside strong share price momentum, with a 7 day share price return of 32.12% and a year to date share price return of 106.89%. However, the 5 year total shareholder return is still down 36.01%, despite a 3 year total shareholder return of 100.84%.
Scan how Okta compares with other identity and AI security stocks showing strong momentum and fundamentals in our hand picked 74 profitable AI stocks that aren't just burning cash.
Okta now appears to be a stronger, more profitable business than it was a year ago, and the stock has surged accordingly. After a move like this, is there still enough potential upside at the current price to justify committing new capital?
Most Popular Narrative: 14.6% Overvalued
Okta last closed at $173.04, while the most followed narrative on Simply Wall St sets fair value at $151.00. That gap underpins a story focused on profitability, AI driven identity demand and how far current pricing already reflects those themes.
For a long time, the market criticized Todd McKinnon because Okta, despite having an excellent technical solution, failed to become profitable. With the Q1 FY2027 results, that discussion appears to be over.
The question is no longer whether Okta can become profitable. The new question is whether Todd can unlock the next market: Identity and Access Management (IAM) for AI Agents.
Want to see what sits behind that $151 fair value for Okta? The narrative leans on sustained revenue expansion, higher margins and a premium earnings multiple that assumes meaningful traction in AI related identity demand. Curious how those ingredients combine into one long term valuation path.
The narrative implies Okta is trading above its own fair value estimate, with the discount_to_fair_value figure at around 14.6% overvalued relative to $151.00. That view bakes in assumptions about mid single digit to low double digit revenue growth, stronger profitability and what investors may be willing to pay for earnings several years from now.
Rather than just watching the recent share price surge, readers can use that narrative to frame questions on Okta’s next chapter. For example, how identity for AI agents might expand the addressable market, how quickly new products such as Okta for AI Agents and governance tools could scale and what that could mean for margins over time.
Result: Fair Value of $151.00 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Okta’s narrative still hinges on AI agent adoption and new monetization metrics, and slower customer uptake or pricing missteps could challenge the current valuation story.
Find out about the key risks to this Okta narrative.
Another view on Okta using the SWS DCF model
The most followed Okta narrative suggests the stock is about 14.6% above its $151.00 fair value. Yet our DCF model paints a slightly different picture. At $173.04, Okta trades only 0.9% below its future cash flow value estimate of $174.55, which is effectively in line.
Two frameworks, one calling Okta overvalued and one closer to fairly priced, leave you with a simple question: Which set of assumptions about growth and margins feels more realistic to you over the next few years, given the current AI identity story and recent profitability shift?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Okta for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 45 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
If this mix of optimism and caution around Okta leaves you undecided, move quickly to review the details yourself and weigh both sides. A good place to start is by checking the 3 key rewards and 2 important warning signs.
Looking for more investment ideas beyond Okta?
If Okta has sharpened your focus, do not stop here. Broaden your watchlist with other opportunities that match your style before the market moves on.
- Target potential upside in mispriced opportunities by scanning our 45 high quality undervalued stocks that combine quality fundamentals with attractive valuations.
- Build more predictable income by reviewing the 12 dividend fortresses that concentrate on higher yield companies with a focus on resilience.
- Guard against unwanted shocks by checking the 74 resilient stocks with low risk scores that highlight companies with steadier risk profiles.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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