Why DeepSeek's AI Advancement is Bullish for CrowdStrike

Shares of CrowdStrike (CRWD) surged more than 7% leading the Nasdaq 100 (QQQ) higher for the day.

The stock was the best performer among technology stocks as investors continue to shift their investing strategies in the wake of the latest DeepSeek developments.

The AI Technology world was turned on its side Monday following news that DeepSeek had reportedly developed an inexpensive Large Language Model (LLM) that performs better than ChatGPT and other U.S. developed models.

While most investors have worst cased this news as a shake-up of AI stocks, the alternative view of more affordable and efficient AI models does bode well for AI service companies like CrowdStrike.

Shares of CrowdStrike traded heavily on this potential shift as the stock climbed above its recent trading range to break above $400.

The move above $400 also triggers what is referred to as a “volatility rally”.  These rallied occur when a stock breaks from a relatively low volatility period with a sudden surge higher.

The move comes more than a month ahead of the company’s earnings report, scheduled for March 11.

Last quarter, CrowdStrike’s earnings results beat Wall Street analysts’ target by $0.12 as the company saw its revenue grow by nearly 30%.

It is notable that the company is still wrangling with Delta Airlines in the court system regarding the flight disruptions that happened in July 2024.  CrowdStrike moved to have the lawsuit thrown out in December with no outcome yet.

Today’s rally puts the stock above the psychologically significant $400 level as well as Wall Street’s current target price of $380.93.

The move is likely to result in target price updates from Wall Street analysts as the company’s earnings date approaches.

Shares of CrowdStrike maintain a long-term bullish outlook with a price target of $450.

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