Hot AI Investment Tip

Investment in AI could be the key to security in the future! Cybercrime will cost the world US$9.5 trillion by 2024, according to an estimate from Cybersecurity Ventures. Furthermore, data from McKinsey & Company suggest that the corporate sector is on track to spend just $213 billion on cybersecurity this year, which is far below the $2 trillion it should be spending.

Clearly, it is already more expensive on average for a company to not have cyber protection. With the astronomical cost of cybercrime continuing to rise, this aforementioned spending gap is likely to close.

A SentinelOne (NYSE:S) is prepared to capitalize if that happens. It is a cybersecurity provider with artificial intelligence (AI) at the core of its products, and the company continues to grow faster than its competitors. Here’s why investors might want to buy shares of SentinelOne now and maintain them in the long term.

Investment in AI with a cybersecurity leader

The cybersecurity giant Palo Alto Networks recently highlighted a tenfold increase in the frequency of phishing emails over the past 12 months. This is because attackers are using generative AI to quickly create realistic content designed to trick employees into obtaining sensitive information about your organization.

A recent survey by PwC confirms this. Of the 4,702 top CEOs who responded, 64% are most concerned about the cyber risks posed by generative AI. This fear outweighs the spread of misinformation and even the potential reputational risks arising from the use of technology.

Automated cybersecurity tools are critical to repelling the avalanche of AI-powered attacks. The Singularity of SentinelOne is a holistic cloud, endpoint and identity protection platform with AI at its core. The company’s unique storytelling technology tracks security event data across the enterprise. Additionally, it autonomously creates summaries with actionable insights for managers. This reduces alert fatigue, which is a serious problem across the industry as security managers struggle to keep up with the high volume of incidents.

A IA Purple from the SentinelOne is another solution to this problem and another reason to invest in AI. It integrates with the cybersecurity stack and acts as an AI virtual assistant. It’s capable of answering questions, investigating specific issues on command, and even running preventive scans for newly identified threats. Purple AI can save cybersecurity managers countless hours of manual investigative work, ensuring fewer incidents are overlooked.

SentinelOne is growing faster than its competitors

SentinelOne generated US$174 million in revenue during the fiscal fourth quarter of 2024 (ended January 31), a 38% increase from the previous year. This was faster growth than what Palo Alto Networks (19%) and CrowdStrike (33%) delivered in their last quarters. They are two of SentinelOne’s biggest rivals in cybersecurity, all receiving investment in AI.

That said, the SentinelOne It’s a much smaller company, which makes it easier to generate higher growth rates. It reported $621 million in revenue for fiscal 2024, which was comfortably above management’s most recent guidance. However, the Palo Alto delivered US$7.5 billion in revenue in the last 12 months, and CrowdStrike generated $3.1 billion in its recently ended fiscal year.

The other caveat is the final result of the SentinelOne. The company generated a net loss of $339 million during fiscal 2024, although that number fell to $81 million on a non-GAAP basis, which excludes one-time, non-cash expenses like stock-based compensation. A Palo Alto and the CrowdStrike are profitable on both a GAAP and non-GAAP basis given that they are much larger companies and have achieved scale.

Operating at a loss means that SentinelOne is investing more heavily in growth initiatives than its competitors relative to its revenue. This isn’t a problem in the short term, as the company has $926 million in cash and short-term investments on its balance sheet. This way, you can sustain your losses for a few more years. Eventually, however, the SentinelOne It will have to prove to investors that it can generate a profit.

Why buy SentinelOne now

SentinelOne shares are trading 71% below their all-time high. This is because it was established during the technology craze of 2021, when investors gave it an unrealistic valuation. Based on its fiscal year 2024 revenue of $621 million and its current market capitalization of $6.6 billion, SentinelOne shares are trading with a price-to-sales (P/S) ratio of 10. 6 now.

In comparison, the actions of CrowdStrike are trading with a P/S ratio of 26.6, making them 2.5 times more expensive. A Palo Alto has its trading with a P/S ratio of 13.4, so it is also more expensive than the SentinelOneeven though SentinelOne’s revenue is growing twice as fast.

Investors who purchase shares of the SentinelOne now and keep them for the next 10 years you can be glad you did when you look back at this moment. This decade should give enough time for the $1.8 trillion industry spending gap to narrow, and it will also give the corporate sector enough time to convert its fears of generative AI into concrete investments in cybersecurity.