By Kit Norton

Okta had plenty to celebrate in its latest results with strong earnings and a robust outlook for this year. But that isn't what has Wall Street so excited.

Okta stock skyrocketed and more than 20 Wall Street firms raised their price targets Friday, the day after the identity-security company reported better-than-expected earnings and raised its full-year profit guidance.

Shares surged 28% to $121.37 in recent trading, on pace for their biggest daily percentage gain in more than a year, according to Dow Jones Market Data.

So what is behind the shares' meteoric rise? The answer is artificial intelligence, which seems to be the driver behind most market moves these days.

While impressed with the April quarter's results, analysts highlighted AI products as their reasons for optimism.

Okta uses AI primarily as an identity and security layer for enterprise AI tools and agents. The company is also developing systems for customers to manage, discover, and govern AI agents for security purposes.

J.P. Morgan analysts, led by Brian Essex, raised their Okta price target to $120 from $114 on Friday, keeping an Overweight rating on the stock.

Essex noted that Okta for AI agents became generally available in April, with the company announcing partnerships with ServiceNow, Alphabet-owned Google, Amazon.com's Amazon Bedrock, OpenAI, and Anthropic.

"Okta's AI pipeline is the largest the company has seen for any new product introduction," Essex wrote.

In addition, Okta's AI products didn't materially contribute to the solid first-quarter financials and aren't significantly factored into the fiscal 2027 outlook.

"We see room for upside to FY27 numbers if pipeline conversion plays out faster than expected," Essex wrote.

Similarly, Morgan Stanley analysts led by Meta Marshall wrote that AI is emerging as a key strategic narrative for Okta, considering the company's expanding product pipeline.

"New product momentum" is the focus for Okta and that artificial intelligence-related agent identity offerings "provide an additional upside catalyst through the year," Marshall wrote Friday.

Looking out even further, Okta has a meaningful opportunity over the next several years to establish itself as the enterprise "identity system of record" for AI agents, the team said.

"Early traction suggests this opportunity is beginning to materialize," Marshall wrote.

Morgan Stanley raised its Okta price target to $115 from $101 and maintained an Overweight rating on the shares.

As for the results themselves, Okta posted adjusted earnings of 91 cents a share for the fiscal first quarter ended April 30, above Wall Street's 85 cents a share expectation. Revenue grew 11% to $765, beating analyst estimates of $751.8 million.

The company also raised its full-fiscal year profit outlook to between $3.79 a share and $3.87 a share, up from $3.74 a share to $3.82 a share, with a midpoint above Wall Street's full-year prediction.

The slew of Okta price target hikes, mostly due to Wall Street's AI excitement, comes as analysts have already been overwhelmingly bullish on the stock.

Of the more than 40 firms polled by FactSet, Okta stock has an average Overweight rating with a price target of $116.63.

Shares have surged 62% in May, part of a 38% advance this year. Over the past 12 months, the stock is up 15%.

Write to Kit Norton at kit.norton@barrons.com

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May 29, 2026 13:00 ET (17:00 GMT)

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