Last year, Ark Investment Management CEO Cathie Wood said software companies will be the next big opportunity in artificial intelligence (AI), predicting they will eventually generate $8 in revenue for every $1 spent on chips from leading suppliers like Nvidia.
Ark operates several funds (both private and exchange-traded) that reflect that stance. Using the Ark Venture Fund, Wood has piled into private AI software companies like OpenAI, Anthropic, and Elon Musk’s xAI. Plus, Tesla is the largest holding in the flagship Ark Innovation ETF, which Wood says is the largest AI opportunity in the world thanks to its autonomous self-driving software.
If Wood is right about AI software, there could be a long list of winners in the coming years. Here’s why CrowdStrike (NASDAQ: CRWD) and Meta Platforms (NASDAQ: META) might be two of the biggest.
1. CrowdStrike: A leader in AI-powered cybersecurity
CrowdStrike is one of the world’s best cybersecurity companies. In fact, its stock only needs to rise another 14% to eclipse the $104 billion valuation of the current industry leader, Palo Alto Networks. CrowdStrike’s success stems from its unique lightweight security architecture and its reliance on AI to autonomously thwart attacks.
CrowdStrike’s AI models make over 180 million indicator-of-attack decisions every second — in other words, they are constantly analyzing the motive and intent of attackers to determine the type of threat they pose. Those models are trained on more than 2 trillion security events each day, and that number climbs as more customers join CrowdStrike, which extends the company’s AI advantage over its competitors.
All of that happens in the cloud. By using CrowdStrike, companies don’t have to install bulky programs on every single device in their organization. Instead, they install a lightweight sensor that is connected to the cloud, which occupies minimal processing power compared to traditional cybersecurity software.
CrowdStrike has taken a platform approach to cybersecurity since the day it was founded, which is in contrast to industry norms where different providers specialize in specific segments like cloud security, identity protection, and endpoint security. CrowdStrike covers all bases through its 28 modules, and while not every business needs the entire suite, 65% of customers were using five or more modules as of the recent fiscal 2025 first quarter (ended April 30).
According to a CrowdStrike-sponsored study by International Data Corporation, businesses can save $6 for every $1 they invest in consolidating their cybersecurity needs onto the one platform. Therefore, not only do they get best-in-class protection, but switching to CrowdStrike is a no-brainer financially.
CrowdStrike ended Q1 with a record $3.6 billion in annual recurring revenue, but management believes that figure will surge 177% to $10 billion within the next five to seven years. That estimate might even be conservative considering how quickly AI is advancing, which will not only improve CrowdStrike’s protective capabilities, but will create new threats that will drive more cybersecurity spending in the corporate sector.
2. Meta Platforms: A social media giant turned AI developer
Meta Platforms is home to leading social networks like Facebook, Instagram, and WhatsApp, which serve 3.2 billion people every day. The company is already using AI to curate the content feeds for each user on Facebook and Instagram to ensure they are seeing posts that are most relevant to them. Last year, this drove an increase in engagement across both platforms, which provided Meta with more opportunities to generate advertising revenue.
But the company might have an even greater AI opportunity in its large language model (LLM) called Llama. It’s the world’s largest open-source model, so developers can use it for free to build their own AI applications, which allows Meta to crowdsource its testing to make improvements more quickly. That’s important because Llama is the key to creating new AI features for Meta’s existing platforms.
For example, the company launched a chatbot called Meta AI last year that users can access through Facebook, Instagram, Messenger, and WhatsApp. It can answer complex questions and generate images like most chatbots, but it can also be added to group chats to make restaurant and travel recommendations, or even offer gift ideas. Meta AI is currently powered by Llama 3, but the company is already training its next-generation model, which should offer even better capabilities.
Eventually, every business using Meta’s apps could have its own personalized Meta AI-style chatbot that can handle incoming customer queries, and potentially even process sales. That should create new opportunities for Meta to generate revenue.
Here’s the best part about Meta stock: It’s cheap. Based on the company’s $17.41 in trailing-12-month earnings per share, it trades at a price-to-earnings (P/E) ratio of 28.9. That’s a 9.4% discount to the 31.9 P/E ratio of the Nasdaq-100 index.
In 2025, Wall Street thinks Meta will generate $21.59 in earnings, which places its forward P/E ratio at just 23.3. That implies Meta stock will have to rise 36.9% by the end of next year just to trade in line with the broader tech sector.
If Cathie Wood is right about AI software, Meta stock might be an even bigger bargain today than the above numbers suggest, because there could be entirely new AI monetization opportunities to come as this story unfolds.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Meta Platforms, Nvidia, Palo Alto Networks, and Tesla. The Motley Fool has a disclosure policy.
Cathie Wood Says Software Is the Next Big AI Opportunity — 2 Supercharged Stocks You’ll Regret Not Buying if She’s Right was originally published by The Motley Fool
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