Palo Alto Networks, Inc. (NASDAQ:PANW) and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) are part of the cybersecurity sector, which Cramer has been a fan of. The former’s shares are up by 91% while the latter’s stock has gained 67% over the past year. In his Monday morning appearance, Cramer briefly commented on the firm’s support for the Open Secure AI Alliance. The Alliance, set up by NVIDIA, aims to develop and promote open technologies to support AI development. Cramer asserted that the cybersecurity companies will continue to perform well:
“And I know that Crowd and Palo Alto have both, Crowd was one of the original signers. So I think that the cybersecurity companies do very well.”
This appearance wasn’t the first time that Cramer praised the sector and predicted that it will perform will in the AI era. Previously, Cramer has remarked that firms such as Palo Alto Networks, Inc. (NASDAQ:PANW) and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) will benefit from AI’s demand for data and computing resources along with threats to US infrastructure from external actors. The sector was thrown into fresh scrutiny recently after an OpenAI agent escaped and hacked another website to prompt the firm to rely on a Chinese model to stop the breach.
Zooming into the two firms and starting from CrowdStrike Holdings, Inc. (NASDAQ:CRWD), the main debate for the firm surrounds the questions about its multiple. With the current forward price-to-earnings multiple sitting at 151, investors wonder whether the firm’s business and operations can justify the multiple. To understand the concerns, consider Palo Alto Networks, Inc. (NASDAQ:PANW)’s P/E multiple, which is 78.74. In short, even though the two firms are both cybersecurity companies, the former’s multiple is almost 2x the latter’s multiple.
To justify CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s multiple, the bulls point towards the firm’s Falcom platform. They outline that Falcon and other products enabled the firm’s revenue to grow 26% annually to $1.39 billion and its annual recurring revenue (ARR) to grow to $4.92 through a 23% jump. Additionally, they add that CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s focus on automated threat detection can serve it well amidst the rise in agentic AI use. However, the bears point towards the fact that the firm is still unprofitable on a GAAP basis and add that the current valuation leaves little room for further gains.
As for Palo Alto Networks, Inc. (NASDAQ:PANW), the debate surrounds the firm’s decision to combine different cybersecurity platforms in a single bundle. The bears and the bulls are split between whether this presents a financial burden through discounts that can be justified through long term growth. The bears also point towards a high P/E multiple. While Palo Alto Networks, Inc. (NASDAQ:PANW)’s 78.74 multiple is lower than CrowdStrike’s, it is still higher than Zscaler’s 32.36 and Fortinet’s 52.63.
Shifting to the hedge funds, 79 out of the 1,022 hedge funds part of Insider Monkey’s Q1 2026 database had held a stake in CrowdStrike Holdings, Inc. (NASDAQ:CRWD). Interest in Palo Alto Networks, Inc. (NASDAQ:PANW) was stronger as 87 funds held a stake. However, the jump in CRWD was higher as 67 out of the 1,041 funds in the Q4 2025 database had owned the stock, while 86 had held PANW. Short interest in the two is roughly the same and ranges between 2.52% of float sold short for Palo Alto and 2.74% for CrowdStrike.
While Insider Monkey acknowledges the risk and potential of CRWD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CRWD and that has 100x upside potential, check out our report about the cheapest AI stock.
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Disclosure: None.
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