Institutions Are Fueling CrowdStrike's Next Leg Higher

Earnings season just got underway, but investors in CrowdStrike Holdings Inc. (NASDAQ: CRWD) will have to wait until late November for the company to report.

However, some clues suggest the stock’s 7.7% climb in the last 30 days is just a warm-up for what’s coming through the end of 2025 and into 2026.

Specifically, CrowdStrike draws strong interest from institutional investors, and analysts have become bullish on CRWD stock. For those reasons, long-term investors should look beyond the company’s lofty valuation and focus on the strong demand for its a la carte, AI-native platform.

CrowdStrike Continues to Outperform Expectations

A recent survey by Wedbush notes that cybersecurity spending for enterprise customers exceeded quarterly targets, reaching 109% of the goal. This is coming at a time when other budgets are leveling off or shrinking.

It confirms that demand for cybersecurity solutions continues to grow. This is the fundamental reason to invest in CrowdStrike and other cybersecurity stocks. If AI infrastructure companies are the top-tier technology stocks, cybersecurity must be a close second.

Like many of the high-flying AI stocks, CrowdStrike faces questions about valuation. The company is trading at a price-to-sales (P/S) ratio of around 27x, a slight premium to its historic average.

That’s why it’s crucial to understand another piece of information from the Wedbush survey: that CrowdStrike, along with Zscaler Inc. (NASDAQ: ZS) and Datadog Inc. (NASDAQ: DDOG), received the strongest positive feedback from enterprise customers. Specifically, CrowdStrike outperformed expectations by 5% to 9%.

This outperformance shows how CrowdStrike’s Falcon Flex platform is helping to expand its contracts with public and private sector customers.  

Institutional Buying Outweighs Insider Selling

CrowdStrike skeptics will point to 11 separate sales of CRWD stock since August. These sales were from high-level company insiders and Members of Congress. However, understanding the why behind an insider sale is essential.

In many cases, company insiders made sales as part of a 10b5-1 plan. This is significant because it means the sales were planned months in advance and would occur regardless of the stock price. As far as the congressional trades are concerned, they may be distasteful, but with CrowdStrike winning business from the federal government, this is likely a case of investors taking profit.

What investors should be bullish about is the demand from institutional investors. In the past 12 months, institutional buyers have outpaced sellers in terms of transactions by nearly a 2:1 ratio. In dollar terms, that ratio is nearly 3:1 with $18 billion in institutional inflows compared to $7 billion in outflows.

Recent quarterly data also shows an acceleration in institutional accumulation, with inflows outpacing outflows nearly every quarter since early 2023. This trend suggests that large investors continue to see upside in CrowdStrike’s expanding cybersecurity platform and recurring-revenue business model even after the stock’s sharp rally since September.

Today, institutional buyers own over 70% of CrowdStrike’s outstanding shares. This is significant because institutions take long positions only after deep research, often using their own buy-side analysts.

Analyst Sentiment Has Turned Sharply Bullish

Analyst sentiment is another way to measure the strength of the stock’s recent rally.

In the last 90 days, CrowdStrike has gone from one of the most downgraded stocks to one of the most upgraded ones. Analysts cite accelerating revenue growth, expanding margins, and rising demand for endpoint protection as key drivers behind the turnaround.

Several firms have raised their price targets and earnings estimates in anticipation of continued market share gains. Wells Fargo and Scotiabank have the most bullish price targets at $600, calling for a 21% increase from CRWD's closing price on Oct. 16.

In total, 48 analysts currently cover CrowdStrike, reflecting broad institutional interest in the name. The stock carries a Moderate Buy consensus rating, with an average price target of just under $495, implying a 2.5% potential upside from current levels.

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "Institutions Are Fueling CrowdStrike’s Next Leg Higher" first appeared on MarketBeat.