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Okta Surges 158% YTD: Should Investors Hold the Stock Now?
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Key Takeaways
Okta shares have soared 157.5% YTD, driven by strong enterprise demand for identity security and AI solutions.
Newer products deliver about 40% ACV uplift, while large enterprise customers grew more than 20% in fiscal Q2.
OKTA faces stiff competition and slowing growth, with fiscal 2027 revenues projected to rise 10-11%.
Okta (OKTA - Free Report) shares have jumped 157.5% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s return of 17.4%. The company is benefiting from growing demand for identity security, artificial intelligence (AI) agent governance, enterprise modernization and expanding adoption of its newer products. However, intense competition, uncertainty surrounding AI adoption, slowing customer growth and near-term revenue headwinds remain concerns. What should investors do with OKTA stock? Let’s find out.
Okta Rides on Strong Enterprise Demand & New Products
Okta is well-positioned to benefit from increasing enterprise investments in identity security as organizations accelerate AI adoption and modernize their cybersecurity infrastructure. The proliferation of autonomous AI agents across applications, cloud platforms and enterprise systems is creating demand for identity discovery, authentication, access controls and governance. Okta for AI Agents enables enterprises to discover, secure and govern AI agents while enforcing access policies across heterogeneous environments. Growing adoption of agentic AI is expected to expand the company’s addressable market and create additional cross-selling opportunities across its identity security portfolio.
Okta’s newer offerings, including Okta Identity Governance, Okta Privileged Access, Identity Security Posture Management, Identity Threat Protection and Okta for AI Agents, are helping customers address increasingly complex security requirements. Deals involving newer products generated an average annual contract value (ACV) uplift of approximately 40%, highlighting significant cross-selling and upselling opportunities. Increasing adoption of these solutions is likely to strengthen Okta’s competitive positioning, deepen customer relationships and support subscription revenue growth.
Okta is benefiting from solid demand among large enterprises, improving sales productivity and strong customer expansion activity. During the second quarter of fiscal 2027, the number of customers generating more than $1 million in ACV increased more than 20%, bringing the total to more than 600. Strong pipeline conversion and deal expansions contributed to record bookings for a quarter outside the fiscal fourth quarter. The company is strengthening collaborations with Anthropic, Amazon Web Services, Cisco, OpenAI, Databricks and Snowflake to expand identity controls across AI applications and enterprise systems.
OKTA is facing stiff competition from the likes of Microsoft (MSFT - Free Report) , CrowdStrike (CRWD - Free Report) and Cisco Systems (CSCO - Free Report) . YTD, CrowdStrike, Cisco and Microsoft have returned 114.6%, 42.2% and 9.4%, respectively.
OKTA Stock’s Price Performance
Image Source: Zacks Investment Research
Per OKTA management estimates, Microsoft’s workforce access management market share is at approximately 40% compared with Okta’s 30%. Competition is also intensifying as cybersecurity vendors, enterprise software providers and AI infrastructure companies expand into identity governance and AI agent security.
Okta continues to face challenges in accelerating overall revenue growth despite improving bookings and subscription demand. For the third quarter of fiscal 2027, the company expects revenues of $813-$817 million, indicating approximately 10% year-over-year growth. Current Remaining Performance Obligation growth is projected at 11-12%, below the 14% growth recorded in the second quarter. Okta expects fiscal 2027 revenue growth of 10-11%, including an approximately one-percentage-point headwind from shifting more professional services business to global system integrator partners.
The Zacks Consensus Estimate for Okta’s fiscal 2027 earnings has remained steady at $3.93 per share over the past 30 days. The earnings estimate suggests 12.3% growth over the figure reported in fiscal 2026. The consensus estimate for revenues is currently pegged at $3.22 billion, suggesting 10.4% growth from the figure reported in fiscal 2026.
The Zacks Consensus Estimate for Okta’s third-quarter fiscal 2027 earnings has been steady at 93 cents per share over the past 30 days. The earnings estimate suggests 13.41% growth over the figure reported in the year-ago quarter. The consensus estimate for revenues is currently pegged at $815.5 million, suggesting 9.9% growth from the figure reported in the year-ago quarter.
Here’s Why OKTA is a Hold
OKTA shares are trading at a premium, as suggested by the Value Score of F.
In terms of forward 12-month price/sales (P/S), Okta is trading at 11.23X, higher than the median of 5.08X, the broader sector’s 5.60X, Cisco’s 5.94X and Microsoft’s 9.52X. However, OKTA is cheaper than CrowdStrike, shares of which are trading at 38.93X.
OKTA Stock’s Valuation
Image Source: Zacks Investment Research
Okta’s near-term prospects are supported by resilient subscription demand, growing adoption of identity governance solutions, expanding enterprise relationships and early momentum in AI agent security. Its independent platform architecture, improving sales execution and robust cash generation provide additional strengths. Nevertheless, competitive pressure from Microsoft and other platform vendors, AI monetization uncertainty and moderating revenue growth remain significant concerns. The company’s ability to translate its early AI security leadership into sustained subscription growth while maintaining profitability will be critical to its long-term performance.
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Okta Surges 158% YTD: Should Investors Hold the Stock Now?
Key Takeaways
Okta (OKTA - Free Report) shares have jumped 157.5% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s return of 17.4%. The company is benefiting from growing demand for identity security, artificial intelligence (AI) agent governance, enterprise modernization and expanding adoption of its newer products. However, intense competition, uncertainty surrounding AI adoption, slowing customer growth and near-term revenue headwinds remain concerns. What should investors do with OKTA stock? Let’s find out.
Okta Rides on Strong Enterprise Demand & New Products
Okta is well-positioned to benefit from increasing enterprise investments in identity security as organizations accelerate AI adoption and modernize their cybersecurity infrastructure. The proliferation of autonomous AI agents across applications, cloud platforms and enterprise systems is creating demand for identity discovery, authentication, access controls and governance. Okta for AI Agents enables enterprises to discover, secure and govern AI agents while enforcing access policies across heterogeneous environments. Growing adoption of agentic AI is expected to expand the company’s addressable market and create additional cross-selling opportunities across its identity security portfolio.
Okta’s newer offerings, including Okta Identity Governance, Okta Privileged Access, Identity Security Posture Management, Identity Threat Protection and Okta for AI Agents, are helping customers address increasingly complex security requirements. Deals involving newer products generated an average annual contract value (ACV) uplift of approximately 40%, highlighting significant cross-selling and upselling opportunities. Increasing adoption of these solutions is likely to strengthen Okta’s competitive positioning, deepen customer relationships and support subscription revenue growth.
Okta is benefiting from solid demand among large enterprises, improving sales productivity and strong customer expansion activity. During the second quarter of fiscal 2027, the number of customers generating more than $1 million in ACV increased more than 20%, bringing the total to more than 600. Strong pipeline conversion and deal expansions contributed to record bookings for a quarter outside the fiscal fourth quarter. The company is strengthening collaborations with Anthropic, Amazon Web Services, Cisco, OpenAI, Databricks and Snowflake to expand identity controls across AI applications and enterprise systems.
Intense Competition & Moderating Revenue Growth Hurts OKTA
OKTA is facing stiff competition from the likes of Microsoft (MSFT - Free Report) , CrowdStrike (CRWD - Free Report) and Cisco Systems (CSCO - Free Report) . YTD, CrowdStrike, Cisco and Microsoft have returned 114.6%, 42.2% and 9.4%, respectively.
OKTA Stock’s Price Performance
Image Source: Zacks Investment Research
Per OKTA management estimates, Microsoft’s workforce access management market share is at approximately 40% compared with Okta’s 30%. Competition is also intensifying as cybersecurity vendors, enterprise software providers and AI infrastructure companies expand into identity governance and AI agent security.
Okta continues to face challenges in accelerating overall revenue growth despite improving bookings and subscription demand. For the third quarter of fiscal 2027, the company expects revenues of $813-$817 million, indicating approximately 10% year-over-year growth. Current Remaining Performance Obligation growth is projected at 11-12%, below the 14% growth recorded in the second quarter. Okta expects fiscal 2027 revenue growth of 10-11%, including an approximately one-percentage-point headwind from shifting more professional services business to global system integrator partners.
OKTA’s Earnings Estimate Revision Reflects Steady Trend
The Zacks Consensus Estimate for Okta’s fiscal 2027 earnings has remained steady at $3.93 per share over the past 30 days. The earnings estimate suggests 12.3% growth over the figure reported in fiscal 2026. The consensus estimate for revenues is currently pegged at $3.22 billion, suggesting 10.4% growth from the figure reported in fiscal 2026.
Okta, Inc. Price and Consensus
Okta, Inc. price-consensus-chart | Okta, Inc. Quote
The Zacks Consensus Estimate for Okta’s third-quarter fiscal 2027 earnings has been steady at 93 cents per share over the past 30 days. The earnings estimate suggests 13.41% growth over the figure reported in the year-ago quarter. The consensus estimate for revenues is currently pegged at $815.5 million, suggesting 9.9% growth from the figure reported in the year-ago quarter.
Here’s Why OKTA is a Hold
OKTA shares are trading at a premium, as suggested by the Value Score of F.
In terms of forward 12-month price/sales (P/S), Okta is trading at 11.23X, higher than the median of 5.08X, the broader sector’s 5.60X, Cisco’s 5.94X and Microsoft’s 9.52X. However, OKTA is cheaper than CrowdStrike, shares of which are trading at 38.93X.
OKTA Stock’s Valuation
Image Source: Zacks Investment Research
Okta’s near-term prospects are supported by resilient subscription demand, growing adoption of identity governance solutions, expanding enterprise relationships and early momentum in AI agent security. Its independent platform architecture, improving sales execution and robust cash generation provide additional strengths. Nevertheless, competitive pressure from Microsoft and other platform vendors, AI monetization uncertainty and moderating revenue growth remain significant concerns. The company’s ability to translate its early AI security leadership into sustained subscription growth while maintaining profitability will be critical to its long-term performance.
Okta currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point before accumulating stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.