CrowdStrike is setting the standard for modern cybersecurity and enjoying a well-deserved, incredible year for its stock. It’s a leader in a competitive industry, with rivals, such as fellow Club name Palo Alto Networks , all vying for companies’ ever-expanding cyber budgets. Despite strong earnings Wednesday evening, Palo Alto shares dropped sharply in Thursday’s big market reversal. Nvidia ‘s post-earnings rally fizzled and took Wall Street down with it. Even CrowdStrike, which had been up strongly earlier in the session, turned lower. For the year as a whole, however, CrowdStrike has been a market standout as the company expands artificial intelligence-powered solutions to protect against cyberattacks. Including Thursday’s decline, shares were still up more than 45% in 2025. Many analysts see significant upside ahead for CrowdStrike, with 65% of them calling the stock a buy at an average price target of $534. The stock closed Wednesday at $520. One of those analysts is Dan Ives, global head of technology research at Wedbush. He told CNBC that his bullish view on CrowdStrike is supported by two underpenetrated areas: securing the AI ecosystem and securing the cloud. “Investors are not seeing the tidal wave of demand that’s about to come to CrowdStrike,” Ives said in an interview, arguing Wall Street is “underappreciating” what he calls the second and third derivatives of the AI revolution. “I don’t believe there’s any AI premium built into the stock.” “The AI strategy of CrowdStrike could ultimately result in a stock that’s 40% to 50% higher in the next 12 to 18 months,” said Ives, whose bull-case CrowdStrike price target of $700 per share reflects much of that upside. Ives raised his base-case PT to $600 from $525 earlier this month. That implies a more modest 15% premium to Wednesday’s close, which was not too far off last week’s record highs. CRWD 5Y mountain CrowdSrike 5 years CrowdStrike CEO George Kurtz is betting the next big wave of cybersecurity demand will come from what he called the “agentic revolution,” during the company’s latest post-earnings conference call on Aug. 27. As AI agents proliferate across businesses, he said companies will need new layers of protection to secure how those agents interact with sensitive data. In mid-September, at CrowdStrike’s Fal.Con industry conference, Kurtz described the rise of agentic AI as a “greater than 100x opportunity for CrowdStrike,” compared to the company’s early market opportunities in cloud and endpoint security. The CEO estimated that a 10,000-person company could have 1 million AI agents that would require protection, which creates a massive new addressable market for cybersecurity. Agentic AI is a type of system that can complete tasks without human supervision. It’s great for businesses because these virtual agents can be deployed en masse for much less than regular workers. But it also exposes businesses to a greater risk of cyberattacks because each of those AI agents is a point of vulnerability that hackers can exploit. To be sure, CrowdStrike’s AI ambitions are still in the early innings. Kingsly Crane, an analyst at Canaccord Genuity, told CNBC that adoption will take time. Newer agentic AI “could be a force multiplier for productivity,” but he thinks “it will take time before agents are widely adopted,” he wrote in a Sept. 19 note, following his attendance at Fal.Con. During the conference, CrowdStrike management after-the-bell on Sept. 17 unveiled bullish near-term and long-term growth targets , which sent the stock soaring nearly 13% the next day to over $502. It’s been good to see shares build on those gains. At the time, CrowdStrike said it expected fiscal 2027 net new annual recurring revenue (ARR) growth of more than 20% year over year. ARR is a key metric for judging cyber companies. Management estimated reaching $10 billion in ARR by fiscal 2031, and then doubling that to $20 billion by fiscal 2036, driven by expanding demand for agentic AI security along with next-generation identity and analytics tools and cloud protection. Turning to the cloud, Canaccord’s Crane said it is the “fastest-growing part of the business” at CrowdStrike, noting cloud revenue climbed 35% year-over-year last quarter, with total cloud ending ARR exceeding $700 million. While CrowdStrike already commands roughly 20% to 30% of market share in cloud protection, Crane said the overall opportunity is huge. “Cloud security has the most potential, unrealized upside within CrowdStrike,” he said, estimating the current market size in the range of $17 billion to $20 billion and growing rapidly as more and more workloads move online. That opportunity builds on the foundation of CrowdStrike’s Falcon platform, the core of its business model. The company started out as an endpoint security provider, installing a lightweight agent on devices like personal computers to collect data on potential threats. That data is fed into the cloud, forming CrowdStrike’s powerful engine for detecting attacks. Over time, the company used this infrastructure to expand beyond endpoint security by adding modules like cloud, identity, and data security that customers can easily layer on according to their needs. It’s a model that turned Falcon into one of the most scalable cyber platforms in the market. Wedbush’s Ives estimates only about 45% of enterprise workloads are currently in the cloud. “The best is yet to come,” he said, calling CrowdStrike the “hearts and lungs of the cloud buildout.” As businesses continue to expand their cloud footprint, Ives sees CrowdStrike as a core player powering and protecting that growth. The current bullishness around CrowdStrike is a far cry from last summer’s IT outage, when the company distributed a faulty update to its Falcon security software that caused problems with Microsoft Windows computers running the software. The outage ended up being one of the world’s biggest IT blackouts, impacting industries from banking to airlines. While CrowdStrike has more than recovered from that moment, Ives believes the stock is not getting the respect it deserves. “Investors have been obsessed with trying to find cracks in the armor ever since the black eye last July,” he said. However, Ives pointed out, as Jim Cramer has repeatedly as well, that CrowdStrike never lost a single customer. “Growth is accelerating and they’re about to go into what could be the most important chapter of growth over,” the Wedbush analyst added. He calls CrowdStrike CEO Kurtz’s leadership “a hall of fame performance,” and describes the stock as “a table-pounder in cybersecurity.” Even as CrowdStrike has distinguished itself as a leader in cybersecurity, Ives sees plenty of strength among its peers as the industry moves towards platformization — the idea of cyber companies aiming to be one-stop shops for all of their clients’ security needs. PANW 5Y mountain Palo Alto Networks 5 years That’s where Club holding Palo Alto Networks comes in. Ives has a $225 price target on Palo Alto and a buy-equivalent outperform rating. He credits Palo Alto CEO Nikesh Arora for steering the company successfully into this new era, calling its planned acquisition of identity security company CyberArk the “deal of the decade in cybersecurity.” Shares of Palo Alto have not enjoyed the kind of rally that CrowdStrike has seen, with just single-digit percentage gains year to date. The stock has been trying to recover since it was crushed by investor discontent over the CyberArk deal. Alongside earnings on Wednesday evening, the company announced plans to buy cloud observability platform Chronosphere for $3.35 billion. On Thursday, Palo Alto stock was getting no relief, the day after the company reported better-than-expected fiscal 2026 first quarter earnings and revenue, and then boosted its full-year outlook. We have seen this trading pattern many times before, with the stock down right after earnings only to recover quickly. That’s why we reiterated our buy-equivalent 1 rating on Palo Alto and our $225 price target. Shares might also be down, as portfolio director Jeff Marks wrote in his earnings analysis , because the market may not like that Palo Alto announced a new multibillion-dollar deal, “while it’s already working to close the CyberArk deal, which is the largest in the company’s history.” Marks added, though, that “Arora is a dealmaker with a strong track record of successfully integrating new products into the broader platform — it’s one of the reasons we’re invested in the stock — so we’re not too worried about execution risk.” “We’ve just gone and planted a flag in two new categories called identity and observability,” Arora said on “Mad Money” on Wednesday night. Looking ahead, Ives sees cybersecurity as “one of the strongest subsectors within all of tech over the next year,” thanks to a powerful wave of AI-driven demand that is reshaping how companies aim to protect their digital infrastructure. It is a sentiment that Jim has espoused over the past year as the Club has chosen to own both Palo Alto and CrowdStrike, which is set to report its latest earnings after the closing bell on Dec. 2. (Jim Cramer’s Charitable Trust is long CRWD, PANW. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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