Over the past few years, generative artificial intelligence (AI) has ignited one of the hottest rallies in technology, sending chipmakers and software developers soaring on hopes of transformative disruption. While the Magnificent Seven have captured headlines with eye‑popping gains, some investors worry that the AI boom is losing steam as billion‑dollar R&D budgets struggle to deliver blockbuster profits. Yet visionaries like Palantir (PLTR) CEO Alex Karp insist we’re only scratching the surface. Karp predicts that today’s breakthroughs in algorithms, chip design, and compute infrastructure could ultimately boost AI capabilities by a factor of 1 million.

Amid this backdrop, identity‑security specialist Okta (OKTA) is quietly positioning itself for a breakout year in 2025. Loop Capital’s Yun Kim argues that generative AI will turn identity security from a niche concern into a mass‑market imperative, as enterprises race to protect not only human users but AI agents and API calls. With Okta’s recent acquisition of Auth0 and a marquee partnership with OpenAI, the company commands the deepest customer relationships and the broadest platform in the space, putting it ideally positioned to roll out its identity‑security strategy and capture the AI‑driven demand surge.

About OKTA Stock

Based in San Francisco, Okta is a leading identity security company. It offers cloud‑based software that helps businesses protect user and AI agent logins. Loop Capital argues that generative AI will drive mass adoption of Okta’s platform. 

Okta’s core offerings include the Workforce Identity Cloud and the Customer Identity Cloud. The company has been broadening its portfolio with advanced identity solutions, prioritizing both security and adaptability. Integration services such as Okta and Auth0 remain crucial, and Okta’s edge lies in its seamless connectivity with over 7,000 applications.

OKTA stock was hit hard in late 2023 by a cybersecurity breach that exposed customer data, and the shares continued to decline through 2024. This year, however, the stock has rebounded strongly, gaining 45% year‑to‑date thanks to robust earnings.

At first glance, Okta looks expensive, trading at 35x forward earnings versus the sector median of 20x. However, Loop Capital’s analyst highlights that its forward sales multiple of 7x represents a steep discount to both peers and its own historical average of 17.5x. That multiple contraction reflects a major sentiment shift driven by decelerating revenue growth and maturing core segments.

Okta Reveals a Blowout Fourth Quarter and Strong Guidance

Okta released its fourth quarter earnings on March 3, topping analysts’ estimates on both revenue and profit. The company posted $682 million in revenue, a 13% year‑over‑year increase, and EPS of $0.78 was up significantly from $0.63 in the prior-year period. On the heels of this strong quarter, shares surged 24% on the following day of trading.

The company also ended the quarter with strong free cash flow of $284 million, lifting cash, cash equivalents, and marketable securities to about $2.5 billion. Meanwhile, longer-term deals pushed up remaining performance obligations, which climbed 25% to over $4 billion, providing clear visibility into future revenue. 

Looking ahead, management guides Q1 2026 revenue of $678 million to $680 million (10% growth) and full‑year 2026 sales of $2.85 billion to $2.86 billion (9%–10% growth), while maintaining non‑GAAP operating margins near 25%. 

What Do Analysts Say about OKTA Stock?

Recently, Loop Capital has assigned Okta a “Buy” rating with a $140 price target, citing strong demand for its security platform in generative AI offerings.

Similarly, other Wall Street analysts are also looking bullish on Okta’s growth sentiments, reflected in a “Moderate Buy” consensus. Of 40 analysts covering the stock, 21 rate it “Strong Buy,” two rate it “Moderate Buy,” 16 “Hold,” and only one “Moderate Sell.” 

Despite recent gains that have pushed the stock close to its $119 mean target, the $140 Street‑high projection still offers roughly 24% upside.

The Bottom Line

Okta has rebounded strongly after its 2023 data breach and continues to outperform peers amid market volatility, underscoring its resilience. Its robust balance sheet and profitability provide a solid foundation, while upcoming AI‑driven identity solutions offer significant upside. At the current valuation, Okta represents a compelling buy for growth investors.