Palo Alto Networks vs. CrowdStrike

PANW Revenue (Quarterly YoY Growth) Chart

Cybersecurity is a massive industry that has never been more important. Hackers are more adept at hacking into systems and wreaking havoc on businesses. Precautions should be taken to protect internal and customer data.

This requires the implementation of one (or more) cybersecurity solutions and, therefore, investors should consider adding cybersecurity stocks to their portfolio as the demand for their products is massive.

Two of the most popular are Palo Alto Networks (NASDAQ:PANW) And Crowd strike (NASDAQ:CRWD). But which one is the best buy? Let’s find out.

Palo Alto and CrowdStrike compete strongly

First, let’s discuss each company’s core business in cybersecurity.

Palo Alto divides its business into three segments: network security, cloud security, and security operations. Its network security business includes firewalls and a zero trust platform that prevents third parties from accessing a network. Its cloud security platform protects cloud workloads, and the security operations platform offers products such as endpoint security (endpoints are network access devices like laptops ) and response to threat detection.

CrowdStrike offers a similar product line, although its initial business was not firewalls like Palo Alto. It started with a cloud-first security approach that started with endpoint protection and then expanded to other areas such as identity protection, cloud security, threat intelligence and response to endpoint detection. Palo Alto and CrowdStrike are therefore direct competitors in many of their offerings.

But when you look at their finances, a leader begins to emerge.

CrowdStrike Growth Expected to Remain Strong This Year

Looking at revenue growth alone, CrowdStrike appears to have an edge. However, this is a side effect of being a small business. This is on full display in CrowdStrike’s growth trajectory, as its year-over-year revenue growth slows as it grows.

PANW Revenue Chart (YoY Quarterly Growth)

Even though CrowdStrike is growing faster than Palo Alto, the roles could be reversed if Palo Alto was CrowdStrike’s size. However, the forward indications are not as bright for Palo Alto.

For the quarter ending April 30, Palo Alto expects revenue growth of just 3%. (The results are scheduled to be released Monday.) This is a huge wake-up call, especially compared to CrowdStrike, as well as other cybersecurity companies.

For the quarter ending April 30, CrowdStrike expects revenue of approximately $904 million, representing growth of 31%. (Results are scheduled to be released June 4.) That’s the difference, and it shows Palo Alto is in trouble.

Where is it?

Palo Alto management said during the February conference call with analysts that its guidance was “a consequence of the fact that we have changed our strategy by wanting to accelerate both our platform and our consolidation and by activating our leadership in of AI”. Artificial intelligence (AI) can play an important role in powerful cybersecurity products, so this shift makes sense.

However, CrowdStrike has used AI since its inception to automatically detect and respond to threats without human intervention. This gave CrowdStrike an advantage over Palo Alto networks in the endpoint protection game.

What action?

For me, that’s all I need to declare CrowdStrike the winner. He already has significant experience in AI, while Palo Alto is late to the game.

CrowdStrike is by far the best buy here, and I wouldn’t be surprised to see it start attracting some Palo Alto customers in the future.

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Keithen Drury holds positions in CrowdStrike. The Motley Fool ranks and recommends CrowdStrike and Palo Alto Networks. The Motley Fool has a disclosure policy.

Best Cybersecurity Stock: Palo Alto Networks vs. CrowdStrike was originally published by The Motley Fool

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