The Zhitong Finance App learned that investment bank Bernstein said in a newly released research report that CrowdStrike (CRWD.US) held an Analyst Day event in September made the bank continue to be optimistic about the company's future prospects. Not only is the company at the cutting edge of enterprise artificial intelligence (AI) deployment security protection (such as Guardian), which can resist new external threats powered by AI (such as SafeMind), but the modernization of traditional anti-virus software also appears to be accelerating, driven by AI-induced cybersecurity anxiety. The latter creates an opportunity for phased expansion—customers may initially prioritize EDR/AIDR modernization and then naturally expand their business into other key areas such as identity security (Identity) and Cloud Security (Cloud Security).
Bernstein believes this is not a short-term surge in demand, but rather a business development trend that is expected to continue for several years. The bank anticipates that by fiscal year 2029, EDR/XDR and Guardian will add more than $3 billion in total ARR. Currently, approximately 40% to 50% of enterprise end-user seats still use traditional anti-virus software or “Next Gen Anti-Virus” (Next Gen Anti-Virus). The bank anticipates that most of these will move to EDR/XDR within the next 2 to 3 years. Assuming CrowdStrike gains a disproportionate share of the market and uses the latest Flex-based pricing model, this would result in an ARR increase of over $1.25 billion.
Bernstein added that customers are unlikely to stop there. Guardian's related capabilities seem to be the next “must-have” product for more than 80% of customers who are expected to use desktop AI agents by 2028 (or FY2029). Based on its pricing level of approximately 1:1 of EDR/XDR, Guardian will bring in ARR increments of over $1.75 billion.
Bernstein expects that by 2029, Identity, CloudSec, and Next Gen SIEM will collectively add more than $2.5 billion in ARR. As a large number of new customers adopt EDR/XDR, the bank expects net ARR growth from other products to accelerate again. These products are natural add-ons to meet AI security requirements, and their market penetration rate is expected to reach at least the current level, thereby doubling the scale of related businesses by 2028 (that is, fiscal year 2029).
The growth of the SIEM business may also re-accelerate, but perhaps not as much as in the other two business areas. In fact, Bernstein believes that, judging from the size of the Flex contract that has been signed, some signs of a renewed acceleration in growth can already be observed. These contracts may include planned deployment projects that have not yet met reportable ARR standards, which is one reason for the significant increase in ARR for “all other businesses” (that is, the initial scale may be lower than the identifiable ARR calculated at the rate of continued operation during customer deployments).
Bernstein raised his previous forecast for CrowdStrike's 2029 ARR by about 600 million US dollars. Bernstein maintained the “same as the market” rating on CrowdStrike, and the target price was raised from $132 to $177. In terms of valuation, the bank uses the industry valuation multiplier method and the discounted cash flow (DCF) method to each account for 50% of the weight. Among them, the multiplier used in the industry valuation multiplier method was raised from 20 times before to 25 times the expected market sales ratio (P/NTM) because the company's growth cycle is longer; the DCF model maintained a weighted average cost of capital (WACC) of 10% and a growth rate of 3% unchanged.