We recently compiled a list of the 8 best FAANG stocks to buy according to analysts. In this article, we are going to take a look at where CrowdStrike Holdings, Inc. (NASDAQ:CRWD) stands against the other FAANG stocks to buy according to analysts.
“We Are Just at the Beginning of the AI Buildout”
Each of the big tech stocks has revealed its plans to invest $50 to $100 billion in GPU compute, evidence that Artificial intelligence may be the biggest theme right now. On October 21, Ray Wang, Constellation Research’s principal analyst, founder, and chairman, joined CNBC’s ‘Squawk Box’ to share his stance on the tech sector, especially the Magnificent Seven, and the role of artificial intelligence.
The third quarter earnings season is upon us some of the mag seven are yet to report their quarterly results. Wang suggests artificial intelligence is just beginning to pan out and will stand as the major theme for a long while. He adds that companies, among the mega-caps, have poured hundreds of billions into AI during the first half of the year, and plan to add more during the second. He also shared that these mega-cap companies are driving demand as well.
READ ALSO Jim Cramer’s Game Plan: 23 Stocks to Watch and 10 AI Stocks to Watch for the Rest of 2024.
While these expenditures may seem to have little to no payoff, historically investors were also worried about companies investing in the Internet. However, Wang dissects that the internet is not the same as artificial intelligence. The internet was rather open and decentralized and had many winners. AI, on the other hand, is more centralized, closed, and expensive, meaning that only a few players are going to make a mark.
Wang also shares that he owns all of the magnificent seven stocks. An interesting conjunction, highlighted by Wang, is that across search, social media, and commerce, most of the stocks in the Mag 7 have digital ads. Across all these three avenues, the next players cannot compete with the Magnificent Seven, especially in terms of revenue. On the regulatory front, he emphasized that the sector needs some relief. He adds that the tech sector needs to play out mergers and currently IPOs are lined up, explaining why everything is on hold.
FAANG is an acronym, which originally began as FANG, consisting of five major technology companies. The original term, FANG was coined by Jim Cramer in 2013 because, according to him, the four tech stocks belonged together as they functioned across similar themes of digitization and the web. FAANG today is much broader and includes technology companies that are shaping the future, which may also be categorized as the magnificent seven. That said, let’s take a look at the 8 best FAANG stocks to buy according to analysts.
Our Methodology
To come up with the 8 best FAANG stocks to buy according to analysts, we went over the NYSE FANG+ index and picked the latest holdings. We then examined the stocks and picked the ones with the highest analyst upside potential as of October 22, 2024. We also added the hedge fund sentiment of each stock as of Q2 2024. The list is in ascending order of analyst upside primarily and hedge fund holders, as of Q2 2024, secondarily.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Security personnel at their consoles, monitoring a global network of threats in real-time.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Analyst Upside as of October 22, 2024: 5.3%
Number of Hedge Fund Holders: 69
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a cybersecurity company that ranks 6th on our list of the best FAANG stocks to buy according to analysts. The company provides a range of security products including identity management, threat intelligence, and threat detection.
The company has 29,000 clients in multiple sectors including healthcare, retail, technology, and the government, reflecting its strong position in the market. Its AI native cybersecurity platform, Falcon is its primary product, growing at 80% year-over-year, in FQ2 2025. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) has recently closed crucial partnerships, added innovations to its Falcon Platform, and expanded its CrowdStrike Marketplace to meet the growing demand for cybersecurity solutions.
Despite the July 19 incident, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) has been resilient and showcased transparency and accountability to its customers. However, the company must sustain its efforts towards making customers happy. On August 28, Fatima Boolani, Citi US software equity research co-head, appeared in an interview on Yahoo Finance to discuss CRWD following the global outage. She shares that CRWD management has a lot of tasks especially when it comes to rebuilding its trust among investors and managing the impact of their business impact. She adds that the company has an appetite and regaining consumer confidence should remain the primary focus. Boolani argued that since there is a lack of talent in cybersecurity, AI can potentially fill the gap, that CRWD is in the crosshairs of in a positive way.
As Boolani said, the market currently lacks talent in cybersecurity, giving CrowdStrike Holdings, Inc. (NASDAQ:CRWD) an edge and putting it ahead of its competitors. 69 hedge funds were bullish on the stock as of Q2 2024, according to our Insider Monkey database.
ClearBridge Investments’ ClearBridge Growth Strategy stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q3 2024 investor letter:
“Shares of CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a global cybersecurity leader, came under pressure following a software content update in July that caused widespread disruptions across its client base. Importantly, the outage was not caused by a security breach and we are encouraged that the company was swift and transparent in its response and support for customers. While some level of recompense will be required, after ongoing dialogue with company management, we are optimistic that thoughtful remediation efforts, such as offering flexibility around new module uptakes, will position the company well for future growth. Shares have since rebounded on the back of better than feared channel feedback, which suggests CrowdStrike remains a best-in-class provider in the eyes of customers.”
Overall CRWD ranks 6th among the 8 best FAANG stocks to buy according to analysts. While we acknowledge the potential of CRWD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CRWD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
