Okta (OKTA) vs CrowdStrike (CRWD): Which Cybersecurity Stock Is A Better Buy?

Which Of These Cybersecurity Stocks Is The Better Investment In The Stock Market Today?

Enterprises around the world are undergoing a rapid digital transformation. Cloud computing and remote work are at the forefront of this change. If anything, the pandemic has simply accelerated this shift. As a result, cybersecurity challenges have also become more common. Many cybersecurity stocks soared as a result. And demand for cybersecurity services in a new digital era is stronger than ever. Collectively, this has paved the way for disruptors like Okta (NASDAQ: OKTA) and CrowdStrike (NASDAQ: CWRD) to fill the gap and gain market share.

Earlier in March, Palantir (NYSE: PLTR) CEO Alex Karp highlighted the importance of cybersecurity software in an interview with CNBC. Karp brought up the role of cybersecurity as a national defense measure. Whether it is governments, organizations, or even regular consumers, cybersecurity is growing to become a necessity.

Aside from work, even our leisure activities have shifted towards the digital space. All this has and continues to contribute to the meteoric growth of the cybersecurity industry over the past year. Tech stocks may be under pressure, but there’s no question that cyber threats continue to grow in our digital world today. Having said that, it’s safe to say that these cybersecurity services will remain extremely relevant in the foreseeable future. Maintaining this security will be pivotal as the world enters the quantum age of computing. With all that being said, here’s what you need to know about these two top cybersecurity stocks.

Okta (OKTA) Sees Big Growth Ahead With Its New Service Offerings

Okta is an identity-verification software maker whose business got a dramatic boost amid the shift to remote work. Through its zero trust architecture, organizations can manage and secure their user authentication systems across digital ecosystems.

For those unfamiliar, zero trust identity management constantly requires verification of a user before allowing access to data and applications. In an increasingly digitized world, Okta’s identity management software integrations have been in high demand.

The cybersecurity company said Wednesday it expects revenue for the fiscal year to grow by 30% as it unveiled two new products. In brief, these new products aim to enhance data protection and streamline how an organization decides what information users have access to on its service.

Huge Growth Potential & Massive Addressable Market

With the recent pullback in growth stocks like Okta, it provides a nice set-up for investors to take advantage of the discounts. The company’s services lean on AI to grow smarter at identifying potential threats. Besides, being a cloud service can mean a faster response time in comparison with on-premises solutions.

Also, for one thing, Okta signed a definitive agreement to acquire rival IAM company, Auth0 for $6.5 billion. Sure, such a large figure would turn some heads. But Auth0’s IAM portfolio could benefit Okta more than expected. For the uninitiated, Auth0 is a developer tool that gives coders the means to create IAM tools easily. Although Auth0 will continue to operate under a separate identity from Okta, it will open the door for Okta to enter the European markets.

“We have a massive addressable market,” McKinnon said in a “Mad Money” interview. “As everything moves to the cloud, as companies need to connect with their customers through digital channels, as everyone is worried about security, this massive $80 billion TAM (total addressable market) is the foundation for sustained growth for a long time period.”

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CrowdStrike (CRWD) Expands Its Offerings With Zscaler

Similar to Okta, CrowdStrike’s platform was built in the cloud (and on-premise). But the company focuses on an endpoint and workload protection. Be it providing endpoint security, threat intelligence, and cyber-attack response services, CrowdStrike continues to be a force to be reckoned with. And last week, the company announced a collaboration with cloud-native security company Zscaler (NASDAQ: ZS).

Essentially, the collaborations between the two provide joint customers with adaptive, risk-based access control to private applications, enabling improved defense for people working from anywhere.

Zscaler CTO Amit Sinha said, “The enterprise perimeter doesn’t exist anymore, the internet is the new corporate network, and security should follow users and workloads wherever they are.” Sinha went on to highlight that the current collaboration “dramatically reduces an organization’s attack surface.”

Rising Cloud & Cybersecurity Spend

Increasing cloud and cybersecurity spend will serve as a major tailwind for the sector and CRWD stock. As the company continues to advance its product offerings and subscription base, the company sees a huge opportunity with the cloud security space with the increasing number of cyberattacks.

According to VM Intelligence, the cloud security market is expected to reach $37.7 billion by 2027. That represents a 25.9% CAGR from 2019’s $6.7 billion figure. With a large majority of companies running some sort of cloud-based software, demand for cloud security solutions is rising. This puts CrowdStrike in a great spot to benefit in the long run.

It is also worth mentioning that the company continues to play a vital role in investigating the U.S. government hack since December 2020. Four months later, the investigation is still ongoing and CrowdStrike has named numerous other companies as victims of the hack. Given its industry-leading prowess in handling this matter and robust growth outlook, CRWD stock is one attractive investment option for long-term investors.

Bottom Line: OKTA Stock Vs. CRWD Stock

Now, there is no shortage of trends and industries that offer double-digit growth potential this decade. But cybersecurity is arguably one of the safer bets. Of course, not everybody will agree with that statement. Nevertheless, if you are bullish on cybersecurity, both OKTA stock and CRWD stock have the potential to continue to outperform the broader market in the long run. Both are in great position to benefit as more remote working becomes essential.

For skeptics who worry about the valuation, the update from Okta proves that it certainly has the ability to grow into its valuation. The same thing could also be said to CrowdStrike as it is deemed as the leader of the pack. Now, there is no reason to believe cybersecurity will be a winner-take-all game. If you would like to spread your bets, these are solid names no matter how you look at them.