In July of 2024, a defective software update by cybersecurity firm CrowdStrike Holdings Inc. (NASDAQ: CRWD) led to global technology outages across multiple industries. In response, CrowdStrike shares plummeted, losing nearly 44% of their value in about two weeks before reaching a low point in early August. Since then, CrowdStrike stock has experienced a fairly steady recovery, although it remains well below its pre-incident levels.

For the most part, CrowdStrike has been fairly quiet about the faulty update since the summer. However, a recent earnings report by Delta Air Lines Inc. (NYSE: DAL) has brought the incident back to the attention of investors everywhere. The airline incident heavily impacted the CrowdStrike industry, with many firms canceling flights for days. Delta was among the hardest hit, with about 7,000 flight cancelations during a week, and its earnings report reflects this—the company posted top- and bottom-line misses, including a $380-million shortfall in revenue due to the incident, and lowered its guidance going forward as a result.

Months after the software incident, investors have largely returned to optimism about CrowdStrike. Thirty-four Wall Street analysts have named the stock a Buy, while just seven currently have a rating of Hold or Sell. Analysts predict that the share price will continue to rise, though with an upside potential of 5.8%, the stock is not expected to reach its highs from before the incident. With so much speculation surrounding this company, it's worth a closer look at its fundamentals to determine if it's likely to maintain this upward trajectory or if perhaps another cybersecurity firm could capitalize on the moment.

Strong Performance in the Latest Quarter and Client Retention

Much of the renewed enthusiasm for CrowdStrike may be due to its impressive results for its second quarter of fiscal 2025, which ended less than two weeks after the incident. During this period, the company posted a 32% year-over-year increase in total revenue and income from operations compared with a loss the year before. Net income per share attributable to the company was 19 cents, compared to just three cents in the prior-year period. The company's Falcon platform continues to drive subscriptions.

CrowdStrike's cybersecurity products are closely integrated into the tech infrastructures of many of its clients—two-thirds of customers use at least five CrowdStrike modules simultaneously—making a switch to another provider cumbersome and costly. This may have contributed to the company's strong retention of customers even after the software update debacle. Indeed, the company has taken on new partnerships since July, including a major new collaboration with NVIDIA Corp. (NASDAQ: NVDA). Overall, as of September, the firm experienced a 98% gross spending retention rate after the incident.

Future Growth Possible

Even though it has been below its peak since the summer, CrowdStrike is still an expensive stock. It is trading at a massively high price-to-sales ratio of 21.5. However, the company has room to grow as it expands its AI-based offerings and gathers new clients. CrowdStrike executives have set a goal of $10 billion in annual recurring revenue by the end of its 2029 fiscal year. This is a lofty goal but one that the company seems on pace to achieve, particularly if it is able to continue to improve its margins.

Analysts are optimistic that the company will also achieve growth measures in the meantime. Based on analyst evaluations, the company's projected earnings growth is a healthy 54.7%.

A Dip Opportunity

Suppose CrowdStrike's future trajectory looks like this. In that case, it will likely seem in hindsight that the July software update incident was a minor blip for the company that provided investors with a rare moment to buy the dip.

While shares remain below their peak levels from earlier in the year, the dip remains—although it gets smaller and smaller as CRWD continues to recover lost ground.

On the other hand, investors may also consider this an opportunity to look to CrowdStrike's competitors like Palo Alto Networks Inc. (NASDAQ: PANW), which currently has a price-to-sales ratio of 15.2.