Why SentinelOne's AI-Driven Platform and Valuation Make It a High-Conviction Buy in Cybersecurity

The AI-driven cybersecurity sector is undergoing a transformative shift, driven by the urgent need for automated threat detection and scalable solutions to combat increasingly sophisticated cyberattacks. Amid this evolution, SentinelOne (S) stands out as a compelling growth-at-a-reasonable-price (GARP) investment. With a robust AI-native platform, accelerating revenue growth, and a valuation that lags far behind its peers, the company offers a rare combination of innovation and affordability in a high-growth industry.

SentinelOne’s Explosive Growth Metrics

SentinelOne’s financial performance in 2025 underscores its momentum. The company reported $821 million in annual revenue, reflecting a 32.25% year-over-year increase [2]. More impressively, its annual recurring revenue (ARR) surpassed $1 billion, with 50% of new bookings coming from products beyond traditional endpoint security, such as AI SIEM and cloud security [2]. This diversification highlights the company’s ability to capitalize on the broader AI cybersecurity trend, where enterprises are prioritizing integrated, automated solutions to manage data privacy and threat detection [3].

The company’s Q2 2026 results further validate its trajectory: revenue hit $242.2 million, up 22% year-over-year, and it raised its full-year revenue forecast to $998 million–$1.02 billion [4]. These figures outpace the projected 21.3% compound annual growth rate for the AI cybersecurity market through 2033 [4], positioning SentinelOne as a clear beneficiary of industry tailwinds.

AI-Driven Competitive Edge

SentinelOne’s technological differentiation lies in its AI-native Singularity platform and Purple AI engine. These tools enable autonomous threat detection, cloud and data protection, and reduced reliance on manual intervention, offering clients a cost-effective alternative to traditional cybersecurity models [2]. The Purple AI solution, in particular, has achieved a 30% attach rate for all licenses sold in Q2 2026 [5], signaling strong market adoption.

The company’s leadership in innovation is further cemented by its recognition as a Gartner Magic Quadrant Leader for Endpoint Protection Platforms for the fifth consecutive year [6]. This accolade underscores its ability to balance cutting-edge technology with enterprise-grade scalability, a critical factor as organizations increasingly adopt AI tools to address complex security challenges.

Valuation: A GARP Opportunity in a Premium Sector

Despite its growth, SentinelOne trades at a stark discount to its peers. As of 2025, the company’s price-to-sales (P/S) ratio is approximately 7 [1], significantly lower than CrowdStrike’s 28 [2], Zscaler’s 16.5 [1], and Palo Alto Networks’ 14.1 [1]. This valuation gap is even more pronounced when considering the broader software industry’s average P/S ratios: 38.7 for “Software - Application” and 29.32 for “Software - Infrastructure” [5]. SentinelOne’s forward P/S ratio of under 6 times its projected 2025 revenue [6] suggests the market is underestimating its growth potential.

While the company’s trailing twelve months (TTM) P/E ratio is negative (-13.34) [1], this reflects ongoing reinvestment in growth rather than a lack of profitability potential. Analysts highlight its positive adjusted earnings per share of $0.05 [6] and a 32% revenue increase in 2025 as indicators of improving fundamentals. In contrast, competitors like CrowdStrike and Microsoft face higher valuation multiples despite slower growth rates, making SentinelOne a more attractive GARP candidate.

Risks and Considerations

SentinelOne’s path to profitability is not without challenges. The cybersecurity sector is highly competitive, with rivals like CrowdStrike and Microsoft leveraging their broader ecosystems to capture market share. Additionally, the company’s negative P/E ratio raises questions about short-term profitability. However, its strong revenue growth, expanding product portfolio, and AI-driven differentiation mitigate these risks. The AI cybersecurity market’s projected 21.3% CAGR through 2033 [4] provides ample runway for SentinelOne to scale its offerings and achieve profitability.

Conclusion: A High-Conviction Buy for GARP Investors

SentinelOne’s AI-driven platform, accelerating revenue growth, and undervalued stock position it as a standout GARP opportunity in the cybersecurity sector. While the company faces competition from larger players, its innovative technology, expanding market share, and attractive valuation create a compelling risk-reward profile. For investors seeking exposure to the AI cybersecurity boom without paying premium multiples, SentinelOne offers a rare combination of growth potential and affordability.

Source:
[1] SentinelOne (S) - P/E ratio, [https://companiesmarketcap.com/sentinelone/pe-ratio/]
[2] SentinelOne Revenue 2021-2025 | S, [https://macrotrends.net/stocks/charts/S/sentinelone/revenue]
[3] SentinelOne, Inc. (S) Stock: Climbs as AI Cybersecurity Demand Drives Growth, [https://coincentral.com/sentinelone-inc-s-stock-climbs-as-ai-cybersecurity-demand-drives-growth/]
[4] SentinelOne Earnings Point to Strong AI-Driven Cybersecurity Demand, [https://www.investopedia.com/sentinelone-earnings-point-to-strong-ai-driven-cybersecurity-demand-11800628]
[5] PE ratio by industry, [https://fullratio.com/pe-ratio-by-industry]
[6] SentinelOne Gains Adoption Momentum Despite Macro-Economic Headwinds, [https://securityboulevard.com/2025/09/sentinelone-gains-adoption-momentum-despite-macro-economic-headwinds/]