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The latest rebalancing for the S&P 500 took place in mid-June, and cybersecurity darling CrowdStrike (CRWD -1.06%) earned a spot in the esteemed index. While getting added to the S&P 500 is an impressive milestone, it’s not reason enough to buy a stock. Nevertheless, CrowdStrike is firing on all cylinders, and I think it’s best days are ahead.

Let’s dig into the company’s progress and explore why now is a lucrative opportunity for long-term investors to own CrowdStrike.

CrowdStrike is in a league of its own

CrowdStrike operates in the cybersecurity industry and specializes in threat detection and endpoint protection through its flagship platform, called Falcon. While the cybersecurity landscape is ripe with competition, CrowdStrike stands out as a winner, thanks to its proven ability to cross-sell.

For the company’s first quarter of fiscal 2025 (ended April 30), nearly two-thirds of CrowdStrike’s total customers were using five or more products. Moreover, new deals with eight or more products increased 95% year over year. By selling multiple products to its customer base, CrowdStrike can expand its recurring revenue base, all while recognizing strong profit growth.

For the quarter ended April 30, CrowdStrike’s annual recurring revenue (ARR) increased 33% year over year to $3.7 billion. Furthermore, the company posted net income of $43 million during the first quarter, compared to just $0.5 million during the same period last year.

The combination of accelerating revenue and profit growth is encouraging, and I think it’s just getting started.

The party is just getting started

Back in 2022, CrowdStrike released an investor presentation showcasing a total addressable market (TAM) size of $75 billion at that time. Management further explained that with the company’s current product portfolio at that time, the TAM could reach $97 billion by 2025 and $158 billion by 2026 should CrowdStrike execute on its new-product roadmap.

Clearly, a lot has changed over the last couple of years. Not only are cybersecurity protocols more important than ever to combat hackers and protect data and privacy, but developments in artificial intelligence (AI) are making their way to just about every use case in the tech realm.

According to the company’s most recent investor presentation, CrowdStrike now believes its TAM is $100 billion. What’s more, management sees the addressable market expanding to $225 billion by 2028 as generative AI becomes increasingly featured in cybersecurity tools.

Is CrowdStrike a good stock to buy right now?

CrowdStrike has proven that it can compete in an intense cybersecurity market and do so in a highly profitable way. Moreover, as AI demand continues to surge, the company should be in a position to benefit from secular tailwinds.

The one drawback of investing in CrowdStrike is its pricey valuation. Right now, its stock trades at a forward price-to-earnings (P/E) ratio of 96 and a price-to-free-cash-flow (P/FCF) multiple of 93.

Simply put, the stock is expensive — even for growth investors. With that said, I still think CrowdStrike is a compelling opportunity.

The rate at which the company and its addressable market are growing shouldn’t go unnoticed. Cybersecurity in and of itself is a big market, and CrowdStrike has built a formidable position, even though there are many larger, better-capitalized players. Furthermore, now that AI has become increasingly more important for businesses of all sizes, CrowdStrike fits squarely at the intersection of two of the tech sector’s hottest end markets.

Considering the company’s ARR of $3.7 billion represents only 1.6% of the current estimated market size, CrowdStrike has a long way to go before its business starts to mature or plateau.

I think CrowdStrike’s premium valuation is warranted and I am optimistic the company can continue generating strong top-line growth, supplemented by robust cash flow. Long-term investors may want to consider a position in CrowdStrike as a hedge to other AI stocks. It’s a leading company among cybersecurity opportunities.