Jim Cramer Says AI Could Make Okta’s Security Software More Essential

Jim Cramer highlighted Okta, Inc. (NASDAQ: OKTA ) on the September 16 episode of Mad Money, mentioning that artificial intelligence is not making the identity-security company obsolete, as he said:

Now that everybody's wringing their hands over the risk of AI, I'm going to drill down on the cybersecurity plays that I think could help mitigate the risk. Take Okta, a major player in identity verification that reported a phenomenal quarter in late August. Stock's now up 144% over the past 6 months, in part because it's no longer being held back by AI displacement worries. Turns out artificial intelligence was never going to make Okta obsolete. If anything, their security software is more essential than ever now that you've got AI agents roaming around the internet.

Okta's Backlog is Growing Faster Than Revenue

Okta, Inc.'s (NASDAQ:OKTA) fiscal second-quarter 2027 results showed continued financial improvement. Revenue increased 11% year over year to $805 million, while current remaining performance obligations rose 14% to $2.59 billion. Total RPO increased 17% to $4.86 billion, and free cash flow rose to $227 million from $162 million a year earlier. The company raised its fiscal 2027 revenue outlook to $3.216 billion-$3.226 billion, representing 10%-11% growth.

The AI-agent opportunity is also becoming more concrete in the company's product development. On September 9, Chief Product Officer Ely Kahn said, "Nobody wants to slow AI down, but you can't simply hand out access and hope for the best," adding that enterprises need to "govern, secure, and monitor every identity: humans, AI agents, and non-human workloads alike." Okta said its new capabilities are designed to provide real-time control over those identities.

Okta's Stock Has Rerated Faster Than Its Growth

The stock's gain has far outpaced the company's roughly 10% expected revenue growth. Okta, Inc. (NASDAQ:OKTA) expects fiscal third-quarter 2027 revenue of $813 million-$817 million, representing roughly 10% year-over-year growth, while cRPO is expected to increase 11%-12%, below the 14% growth reported in the second quarter. The stock jumped 28.6% to $172.91 on August 27 after the earnings report, and Cramer said it had gained 144% over six months as of September 16. That creates a higher bar for Okta to meet even if its operating performance continues to improve.

The AI opportunity also remains difficult to quantify. Okta has disclosed early AI-agent deals, but it does not report AI-agent revenue separately. As a result, the latest results do not yet show how much of the company's future growth can be attributed to AI-agent security.