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Okta Rises 37% YTD: Is There More Room for the Stock to Jump?
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Key Takeaways
Okta shares are up 36.6% YTD, helped by strong Q1 bookings, revenue growth and upbeat FY27 guidance.
Newer products made up about 25% of Q1 bookings and drove roughly 40% ACV uplift when attached.
AI-agent security is building a major pipeline, but competition and minimal AI revenue support a hold view.
Okta (OKTA - Free Report) shares have appreciated 36.6% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s return of 16.5%. Following the first-quarter fiscal 2027 results on May 28, OKTA shares have jumped 24.7%, reflecting improving fundamentals and emerging AI-driven growth opportunities. The first-quarter results showed strong bookings, 11% year-over-year revenue growth, a rise in net retention to 107%, increasing sales productivity, low account-executive attrition and strong pipeline generation. OKTA also provided strong top-line growth guidance, which bodes well for investors. However, is this enough for the investors to jump into the stock? Let’s find out.
Okta Rides on Strong Demand for Newer Solutions
Okta’s newer products — especially Identity Governance (IGA), Privileged Access and AI-related offerings — are driving larger transactions and deeper customer penetration. Management disclosed that new products represented roughly 25% of fiscal first quarter bookings and generated around a 40% Annual Contract Value (ACV) uplift when attached to deals. Governance has also evolved into a true “land” product capable of displacing incumbents, while large enterprises continue consolidating more identity functions onto the Okta platform. This platformization story is boosting customer lifetime value, improving retention and creating a more durable growth profile than investors previously assumed. Customers with more than $100K in ACV increased 6% year over year to 5,180 in the fiscal first quarter.
Management repeatedly emphasized that AI-agent security is generating the largest pipeline build for any new product in Okta’s history, with customers urgently seeking solutions to discover, govern and authorize AI agents. Okta’s new AI products are already associated with materially larger deal sizes, while management believes enterprises will eventually have more AI identities than human identities. This creates a substantial new addressable market expansion beyond traditional workforce identity management and positions Okta as a foundational beneficiary of enterprise AI adoption.
OKTA benefits from its installed base of more than 20,000 customers, broad identity portfolio, and vendor-neutral position across AI ecosystems. Okta’s expanding partner base that now includes OpenAI, Anthropic, Google, Amazon, ServiceNow and others. This is allowing customers to secure agents across multiple environments. OKTA’s management argues that enterprises increasingly want an independent identity layer rather than being locked into a specific AI platform. Combined with growing partner-sourced business, rising traction in large enterprises and expanding integration networks, investors are increasingly viewing Okta as a strategic infrastructure provider.
These factors are expected to help OKTA shares appreciate. The company is facing stiff competition from the likes of Microsoft (MSFT - Free Report) , Palo Alto Networks (PANW - Free Report) and Cisco Systems (CSCO - Free Report) . YTD, Cisco and Palo Alto Networks have returned 56% and 54.5%, respectively, while Microsoft has dropped 17.4%.
OKTA Stock’s Price Performance
Image Source: Zacks Investment Research
OKTA Offers Positive FY27 Guidance
For fiscal 2027, OKTA expects revenues between $3.185 billion and $3.205 billion, indicating 9-10% growth from the figure reported in fiscal 2026. Okta expects fiscal 2027 non-GAAP earnings between $3.79 and $3.87 per share.
The Zacks Consensus Estimate for Okta’s earnings has increased by four cents to $3.83 per share over the past 30 days. The earnings estimate suggests 9.4% growth over the figure reported in fiscal 2026. The consensus estimate for revenues is currently pegged at $3.20 billion, suggesting 9.5% growth from the figure reported in fiscal 2026.
Okta is facing stiff competition from Microsoft, which management has identified as its primary competitor, particularly through bundled Entra identity capabilities included in Microsoft’s broader software packages. Cost-conscious customers who only need basic identity functionality may choose Microsoft’s bundled offering rather than pay separately for Okta’s solutions. At the same time, larger cybersecurity vendors such as Palo Alto Networks, CyberArk and others are expanding their identity capabilities, increasing competitive pressure as identity security becomes more strategic.
Okta needs to monetize its expanding AI offerings. Revenue contribution from AI Agents and Auth0 for AI Agents was minimal in the first quarter of fiscal 2027, and are not a meaningful driver of current guidance. Okta is initially using simplified seat-based pricing because enterprises are unsure how to budget for AI-agent consumption, which can be a headwind for the company’s monetization strategy.
Here’s Why OKTA is a Hold Now
OKTA’s innovative portfolio and rich partner base are helping the company win clients. However, these drivers are not enough to justify a premium valuation as suggested by the Value Score of D.
In terms of forward 12-month price/sales (P/S), Okta is trading at 6.2X, higher than the median of 5.06X. However, OKTA is cheaper than Microsoft, Cisco and Palo Alto Networks, shares of which are trading at 7.82X, 7.05X and 17.27X, respectively.
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Okta Rises 37% YTD: Is There More Room for the Stock to Jump?
Key Takeaways
Okta (OKTA - Free Report) shares have appreciated 36.6% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s return of 16.5%. Following the first-quarter fiscal 2027 results on May 28, OKTA shares have jumped 24.7%, reflecting improving fundamentals and emerging AI-driven growth opportunities. The first-quarter results showed strong bookings, 11% year-over-year revenue growth, a rise in net retention to 107%, increasing sales productivity, low account-executive attrition and strong pipeline generation. OKTA also provided strong top-line growth guidance, which bodes well for investors. However, is this enough for the investors to jump into the stock? Let’s find out.
Okta Rides on Strong Demand for Newer Solutions
Okta’s newer products — especially Identity Governance (IGA), Privileged Access and AI-related offerings — are driving larger transactions and deeper customer penetration. Management disclosed that new products represented roughly 25% of fiscal first quarter bookings and generated around a 40% Annual Contract Value (ACV) uplift when attached to deals. Governance has also evolved into a true “land” product capable of displacing incumbents, while large enterprises continue consolidating more identity functions onto the Okta platform. This platformization story is boosting customer lifetime value, improving retention and creating a more durable growth profile than investors previously assumed. Customers with more than $100K in ACV increased 6% year over year to 5,180 in the fiscal first quarter.
Management repeatedly emphasized that AI-agent security is generating the largest pipeline build for any new product in Okta’s history, with customers urgently seeking solutions to discover, govern and authorize AI agents. Okta’s new AI products are already associated with materially larger deal sizes, while management believes enterprises will eventually have more AI identities than human identities. This creates a substantial new addressable market expansion beyond traditional workforce identity management and positions Okta as a foundational beneficiary of enterprise AI adoption.
OKTA benefits from its installed base of more than 20,000 customers, broad identity portfolio, and vendor-neutral position across AI ecosystems. Okta’s expanding partner base that now includes OpenAI, Anthropic, Google, Amazon, ServiceNow and others. This is allowing customers to secure agents across multiple environments. OKTA’s management argues that enterprises increasingly want an independent identity layer rather than being locked into a specific AI platform. Combined with growing partner-sourced business, rising traction in large enterprises and expanding integration networks, investors are increasingly viewing Okta as a strategic infrastructure provider.
These factors are expected to help OKTA shares appreciate. The company is facing stiff competition from the likes of Microsoft (MSFT - Free Report) , Palo Alto Networks (PANW - Free Report) and Cisco Systems (CSCO - Free Report) . YTD, Cisco and Palo Alto Networks have returned 56% and 54.5%, respectively, while Microsoft has dropped 17.4%.
OKTA Stock’s Price Performance
Image Source: Zacks Investment Research
OKTA Offers Positive FY27 Guidance
For fiscal 2027, OKTA expects revenues between $3.185 billion and $3.205 billion, indicating 9-10% growth from the figure reported in fiscal 2026. Okta expects fiscal 2027 non-GAAP earnings between $3.79 and $3.87 per share.
The Zacks Consensus Estimate for Okta’s earnings has increased by four cents to $3.83 per share over the past 30 days. The earnings estimate suggests 9.4% growth over the figure reported in fiscal 2026. The consensus estimate for revenues is currently pegged at $3.20 billion, suggesting 9.5% growth from the figure reported in fiscal 2026.
Okta, Inc. Price and Consensus
Okta, Inc. price-consensus-chart | Okta, Inc. Quote
Okta Suffers From Stiff Competition
Okta is facing stiff competition from Microsoft, which management has identified as its primary competitor, particularly through bundled Entra identity capabilities included in Microsoft’s broader software packages. Cost-conscious customers who only need basic identity functionality may choose Microsoft’s bundled offering rather than pay separately for Okta’s solutions. At the same time, larger cybersecurity vendors such as Palo Alto Networks, CyberArk and others are expanding their identity capabilities, increasing competitive pressure as identity security becomes more strategic.
Okta needs to monetize its expanding AI offerings. Revenue contribution from AI Agents and Auth0 for AI Agents was minimal in the first quarter of fiscal 2027, and are not a meaningful driver of current guidance. Okta is initially using simplified seat-based pricing because enterprises are unsure how to budget for AI-agent consumption, which can be a headwind for the company’s monetization strategy.
Here’s Why OKTA is a Hold Now
OKTA’s innovative portfolio and rich partner base are helping the company win clients. However, these drivers are not enough to justify a premium valuation as suggested by the Value Score of D.
In terms of forward 12-month price/sales (P/S), Okta is trading at 6.2X, higher than the median of 5.06X. However, OKTA is cheaper than Microsoft, Cisco and Palo Alto Networks, shares of which are trading at 7.82X, 7.05X and 17.27X, respectively.
OKTA Stock’s Valuation
Image Source: Zacks Investment Research
Okta currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to start accumulating the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.