The cybersecurity industry is rapidly growing in importance as cyber threats become more sophisticated. Many malicious actors are even leveraging advanced technologies such as artificial intelligence (AI) to carry out attacks, requiring new levels of protection.
The consulting firm PwC surveyed 4,410 leading CEOs at the beginning of the year. A staggering 25% of respondents believed their company would face “severe” or “extreme” cyber threats in the next five years. They viewed cyberattacks as an equivalent risk to geopolitical conflict, potentially even more damaging than climate change.
SentinelOne (p 0.43%) is a leading provider of AI-based cybersecurity with a focus on automated threat detection and incident response. The company just reported positive financial results for the third quarter of fiscal 2024 (ending October 31), and its stock immediately jumped 20%. That’s why investors sitting on idle cash – money they don’t need for immediate expenses – should consider investing at least $100 in SentinelOne stock and holding it for the next decade.
Embedding AI across the entire cybersecurity stack
The rise of cloud computing is making cybersecurity more complex than ever. Companies now conduct the majority of their business operations online, which means they must protect their networks, distribution channels, data, applications and even the identities of their employees.
SentinelOne covers all of these bases for more than 11,500 organizations. The company’s Singularity platform is a holistic cloud, endpoint and identity protection solution with automation at its core. SentinelOne believes that machines are better suited to handle security incidents because they can respond much faster than humans.
Actually a report from Palo Alto Networks highlighted that 93% of security operations centers within organizations still rely on manual, human-led processes. This results in 23% of security alerts going uninvestigated due to the increasing workload of security managers. This creates huge vulnerabilities and AI is able to solve the problem.
Singularity is equipped with a variety of AI-powered tools. Its Storyline technology automatically tracks and contextualizes event data for managers, complete with actionable insights they can use to improve their security posture. Additionally, the innovative Singularity Hologram tool can be used within a network to trick malicious actors into revealing themselves by tricking them into attacking a false target.
Earlier this year, SentinelOne launched Purple AI, an AI-powered chatbot that integrates across the entire platform. It reduces alert fatigue, meaning the number of incidents that go uninvestigated is reduced. Purple AI is capable of generating comprehensive incident reports for managers, saving them hours they would otherwise spend manually searching for the root cause. Additionally, the chatbot can be asked to scan assets for new threats whenever they occur.
SentinelOne continues to grow faster than its competitors
Like most technology companies, SentinelOne faced challenges last year due to the deteriorating economic climate. Increased inflation and rising interest rates forced companies to carefully manage spending, even on critical cybersecurity software.
Still, SentinelOne’s revenue rose an impressive 42% year-over-year to $164 million in the third quarter of fiscal 2024. It was a much faster growth rate than two of the company’s main competitors during the same period. CrowdStrike increased its revenue by 35% and Palo Alto Networks by 20%.
To be clear, CrowdStrike and Palo Alto are much larger organizations than SentinelOne, so it is more difficult for them to grow at the same pace. However, recent results suggest that SentinelOne is gaining market share.
SentinelOne’s strong Q3 results also led the company to raise its full-year revenue forecast by $11 million to $616 million. That’s even more impressive when you consider that SentinelOne has controlled its own expenses to ameliorate its net losses. The company’s third-quarter net loss fell 29% year-over-year to $70.3 million.
This is an important step in SentinelOne’s path to profitability and it is encouraging that the company can maintain strong growth while increasing its research, development and marketing spending more slowly.
Why SentinelOne stock is a buy right now
Research firm McKinsey & Company estimates that the damage caused by cyberattacks will exceed $10.5 trillion per year by 2025. The company says the corporate sector should protect itself from these threats by investing a total of $2 trillion annually in cybersecurity software. However, companies are on track to spend just $189 billion in 2023.
As the claims bill increases, this spending gap will close, and SentinelOne is well positioned to benefit. The company just launched a new strategic advisory service called Pinnacle One, designed to help large companies and governments build modern cybersecurity programs. SentinelOne’s experts will coach corporate and world leaders to address the most serious cyber risks, including those arising from the growing number of geopolitical conflicts worldwide.
Pinnacle One is a powerful service offering that could drive adoption of Singularity and other SentinelOne products across the world’s largest companies.
Despite SentinelOne stock’s 20% rise following its upbeat third-quarter earnings report, it is still trading 69% below its all-time high. Broader economic challenges have impacted the valuation investors are willing to pay for growth stocks. However, inflation and interest rates are certainly looking more favorable at the moment, so sentiment should improve in the future.
As of this writing, an investment of $100 is enough to purchase four shares of SentinelOne. Given the scope of the company’s cybersecurity capabilities, investors here could see fantastic returns over the next 10 years (and beyond).