Enterprise security is changing. Companies are not just adding another tool every time a new threat appears. Increasingly, they want fewer vendors that can cover more of their security needs.
That puts Okta, Inc. (NASDAQ:OKTA) and Rubrik, Inc. (NYSE:RBRK) in an interesting position. Okta is the established identity specialist, while Rubrik is expanding from data protection into identity security and AI-agent protection. Both see AI creating a new security problem, but they are approaching it from opposite ends.
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Okta has something Rubrik is still building
Okta’s biggest advantage is its existing position inside large enterprises. The company says more than 20,000 organizations already use it as their identity system of record. It also has more than 8,000 integrations, giving customers a way to connect different applications and technologies without locking themselves into one vendor.
That becomes particularly useful as AI agents spread through companies. An AI agent is software that can act on a user’s behalf. Companies need to know which agents exist, what they can access, and what they are allowed to do.
Okta, Inc. is already selling products aimed at this problem. New products accounted for about 30% of bookings in Q2, while the company said it closed dozens of AI-related deals. The important caveat is that the AI opportunity is still tiny relative to Okta’s roughly $3 billion revenue base. Management itself said it is too early for the product to materially show up in the numbers.
The bigger story may actually be the existing business. Okta expects 26% non-GAAP operating margins and 28%-29% free cash flow margins for fiscal 2027. That gives investors something Rubrik does not yet have to the same degree: a profitable business that can fund its next phase of growth.
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Rubrik is taking a broader bet
Rubrik’s pitch is different. It wants to become the security layer companies turn to when something goes wrong, whether the problem involves data, identities, or AI agents.
Its subscription ARR reached $1.66 billion in Q2, up 33% year over year, while subscription revenue rose 37%. More importantly, its net retention rate was above 119%. That means existing customers, on average, are spending substantially more with Rubrik over time.
Rubrik, Inc. is also trying to turn its existing customer relationships into a broader platform. Customers can start with data protection and then add identity resilience or AI-agent security. The company calls this a platform effect: each additional product can make the overall relationship more valuable.
Evidence suggests this strategy is working. Customers with at least $1 million in subscription ARR grew more than 57%, while those larger customers now account for 88% of subscription ARR.
So which stock looks better?
At 54.35x forward earnings, Okta is not cheap. But that premium comes with an established customer base, strong margins, positive free cash flow, and a growing opportunity to sell more products into existing accounts.
Rubrik offers faster growth and potentially a larger expansion story if its data, identity, and AI products become a single security platform. But investors are paying for that future while the company’s profitability is still developing.
Both stocks have more than doubled since April. Okta has more than tripled. Despite its lofty valuation, Okta might be the better stock to buy. Rubrik may have the more ambitious growth story, but Okta has already built the economics that investors are hoping Rubrik eventually reaches. The interesting part is that AI could help Okta expand beyond its traditional identity market without requiring it to reinvent the business.
Market Sentiment
Hedge fund interest in Rubrik weakened slightly in Q2. The number of hedge funds holding the stock fell from 46 in Q1 to 44 in Q2, while the total value of their positions nearly doubled from approximately $832 million to $1.64 billion. This points to mixed sentiment, with fewer funds holding the stock but substantially larger positions among those that remained invested.
Hedge fund interest in Okta strengthened in Q2. The number of hedge funds holding the stock increased from 49 in Q1 to 58 in Q2, while the total value of their positions rose from approximately $1.30 billion to $1.77 billion.
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This article is originally published at Insider Monkey.
