Cybersecurity firms Palo Alto Networks, Inc. (NASDAQ:PANW) and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) are among the stocks that Jim Cramer has consistently advocated over the past couple of months. Over the year, the two stocks are up by more than 80%. The priimary narrative drivers for both firms are their initiatives to operate in a software industry driven by AI. One major factor that has troubled the sector is AI’s ability to discover vulernabilities in networks and software. The stocks struggled earlier in the year after Anthropic’s announcements of the cybersecurity features of its AI products. On Monday, he referred to this trend again:
“I was with Mr. Brockman of OpenAI. And if you talk to Anthropic, they’re going to say the same thing. That we really have to worry much more about cybersecurity. Now back in February we had Anthropic telling us, you don’t have to worry. . .which is ridiculous, the insurance companies won’t let the same company doing the same model, therefore, do the protection. But, TD Cowen, and this is a good example of coming in higher, recommends that we buy Palo Alto, which is a Club name, and CrowdStrike, Palo Alto,175, 235, CrowdStrike, 360, goes to 400. Because these are the companies, that really, they have the technology to protect us. You know this is again, an example, do you come in at a 170%? This is a market, that I wrote this weekend, is different from any other. Because we always heard, the most dangerous words are this time it’s different. And you never buy stocks up this much. But we have this problem, and the problem is that the earnings are exploding for these companies. So therefore we have to take the PEs up. Even if we don’t want to, we take their PEs up. And the PEs are so low. Not, well these are historically high PE stocks. But they’re lower than we see them. And then when we look at a company like Micron, the PE could be incredibly low. And so what are you going to do? You’re just saying you know what, this is just like Ford Motor? Ford Motor and Micron saying no, no.”
As for the shares’ performance, Cramer later added that a selling signal might be when you didn’t believe there won’t be any hacks.
While they both operate in the same industry, Palo Alto Networks, Inc. (NASDAQ:PANW) and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) have different approaches to their products. For CrowdStrike, the fact that its annual recurring revenue jumped by 24% to $5.51 billion in its Q1 fiscal 2027. The jump came courtesy of net new ARR of $256 million in the quarter. Similarly, the firm’s revenue als jumped by 26% annually to $1.4 billion.
