By Adam Levine

Amid turmoil in software stocks, cybersecurity firm CrowdStrike reports its fourth-quarter earnings on Tuesday afternoon. It's a time of consolidation in security software, and like competitors, CrowdStrike is using targeted acquisitions to prepare for a new world of threats in the artificial-intelligence age.

Wall Street analysts expect fourth-quarter adjusted earnings per share of $1.10, up from $1.03 a year earlier. Sales are projected to rise 23% to $1.3 billion.

It's been rough sledding for all business-software names in 2026, and CrowdStrike is no exception, with shares down 18% year to date. There have been eight days this year when the stock was down by more than 3%, capped by back-to-back routs a little more than a week ago.

The focus is not on this quarter or next quarter but the coming years. There's a narrative that's taken hold that AI will disrupt software by replacing many of its functions and challenging current subscription revenue models. On Feb. 22, CrowdStrike CEO George Kurtz offered a rebuttal for the security companies in a LinkedIn post, saying, "AI is powerful. It's transformative. And it absolutely makes security better. But AI doesn't eliminate the need for security. It increases it."

He was responding to an 8% stock decline on Feb. 20 triggered by the release of a tool that can scan code for possible security holes from AI start-up Anthropic. This indeed makes software more secure.

But that is only one part of security. Hackers will also have AI tools at their disposal, and traditional attacks will get more complex, effective, and widespread. The advent of AI agents -- software that can execute a complex series of tasks from simple prompts -- opens up a huge new security hole. To be useful, agents have to be given a lot of privileges around private data and communications, and that makes them subject to a new class of cyberattack called prompt injection.

CrowdStrike offers a range of security services, many of which were added to its core endpoint security through acquisitions. The company is following that playbook with three recent acquisitions to plug up new AI holes in security that are emerging.

Write to Adam Levine at adam.levine@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 03, 2026 02:30 ET (07:30 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.