SentinelOne’s Hidden Gem: 17% Upside in AI-Powered Cybersecurity

Investors often overlook the power of valuation discounts in high-growth sectors. Today, SentinelOne (NYSE: S) sits at a rare intersection: a 6x FY2026 sales multiple in an industry where peers like CrowdStrike trade at over 20x, and Palo Alto Networks at 15x. Couple this with an AI-driven moat and a margin turnaround, and you’ve got a stock primed for a $7.4 billion market cap, or 17% upside from current levels. Here’s why now is the time to act.

Valuation Discount: A 6x Multiple in a 10x World

SentinelOne’s $5.96 billion market cap (as of May 2025) is a screaming bargain. Its FY2026 revenue guidance of $1.01 billion (up 23% YoY) is being valued at just 6x sales, while CrowdStrike trades at 20x and Palo Alto at 15x. This discount ignores SentinelOne’s Singularity XDR platform, which combines AI-powered threat detection with hybrid cloud/on-premise dominance—a feature rivals like CrowdStrike’s Falcon X lack.

The gap is even starker when considering SentinelOne’s 50% non-endpoint revenue mix. Unlike CrowdStrike, which relies heavily on endpoint security, SentinelOne’sPurple generative AI models and compliance solutions (e.g., Purview) diversify its offerings, reducing commoditization risk. At $7.4 billion, SentinelOne would still trade at just 7.3x sales—a fraction of peers’ premiums.

Margin Turnaround: Profitability’s Inflection Point

SentinelOne’s non-GAAP operating margin is set to turn positive in FY2026, hitting 3-4%—a stark contrast to its -4.78% earnings yield in late 2024. This isn’t just about cutting costs; it’s about scaling high-margin AI services. The $1.1 billion in cash reserves gives SentinelOne flexibility to invest in AI infrastructure without diluting shareholders.

Even as revenue growth decelerates from its 32% FY2025 pace, the margin expansion validates management’s focus on profitability. This “rare air” of growth plus profit visibility is a buy signal in a sector plagued by overvaluation.

Competitive Moats: AI and Hybrid Cloud Dominance

SentinelOne’s Purple generative AI models are its secret weapon. These systems automate 80% of security workflows, slashing manual labor costs for enterprises—a $20 billion+ annual savings opportunity. Meanwhile, 50% of revenue now comes from non-endpoint products, such as cloud workload protection and compliance tools. This diversification shields SentinelOne from price wars in endpoint security, where CrowdStrike and Palo Alto are locked in a race to the bottom.

The Singularity XDR platform also wins in hybrid environments. Unlike CrowdStrike’s cloud-only focus, SentinelOne’s solution works equally well on-premise or in Azure/AWS—critical for enterprises still relying on legacy systems.

Catalyst: 2026 EPS Beat Potential

The $920 million ARR (as of early 2025) is growing at a 25% CAGR, with large enterprises driving adoption. If SentinelOne exceeds its $1 billion ARR target, margins could expand faster than guided, fueling an EPS beat. With $228 million in Q1FY26 revenue, the company is on track to outperform—even if macro headwinds persist.

Final Call: Buy Now—17% Upside, AI-Backed Safety

At $5.96 billion, SentinelOne is a rare “buy” in cybersecurity. The 6x multiple is a mispricing—it ignores AI’s value, margin upside, and diversification. Even a 7.3x sales multiple (half of peers’) gets you to $7.4 billion, with 17% upside. For investors seeking AI-driven growth at a discount, this is a no-brainer.

Don’t let volatility fool you: SentinelOne’s $7.4B target is conservative. With Singularity XDR’s edge and a margin inflection point, this stock is primed to close the valuation gap—and then some.

Action Plan: Buy SentinelOne now—aim for a 17% return by year-end. This is AI cybersecurity at a bargain price. Don’t miss it.