Check Point Software Technologies has jumped by 17% so far this year, and it could head higher following its solid quarterly report.
The company's revenue pipeline is improving, which could lead to stronger growth in the future.
The stock trades at an attractive valuation, and accelerating bottom-line growth could send it higher over the long run.
Check Point Software Technologies(NASDAQ: CHKP) may not be as popular as some of its peers in the cybersecurity industry, but its stock has delivered a resilient performance so far this year.
Check Point stock is up more than 17% in 2025 as of this writing. That's impressive considering that the S&P 500 index is still down by 5.3% year to date as tariff fears and trade war uncertainties roil the market. The key drivers of Check Point stock's recent move higher have been its attractive valuation and consistent growth.
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Its recent results were better than analysts expected, and a closer look at some of its key metrics suggests that it can continue to outpace their consensus expectations in the future.
Accelerating growth ahead
Check Point released its first-quarter 2025 results on April 23. The company's revenue increased 7% from the year-ago period, while non-GAAP earnings per share improved by 9%. The top and bottom lines were slightly better than Wall Street's expectations. Importantly, there is a good chance that Check Point's growth could accelerate thanks to its improving revenue pipeline.
This is evident from the 11% increase in Check Point's remaining performance obligations (RPO) in the first quarter. RPO measures the total value of Check Point's non-cancellable contracts that are yet to be fulfilled. That metric is growing faster than the top line because the company is landing contracts for new business more rapidly than it is fulfilling older ones. This could lead to an acceleration in its revenue growth.
Check Point management points out that the strong interest in its cybersecurity solutions should help it build a robust revenue pipeline for the second half of the year. What's more, management believes that the cybersecurity industry "remains somewhat insulated" from budget shifts caused by the macroeconomic uncertainties created by tariffs. That's probably why the company has yet to see project cancellations or a lengthening of its sales cycle.
Moreover, Check Point's integration of artificial intelligence (AI) tools into its cloud-based Infinity cybersecurity platform is encouraging its customers to increase their adoption of its solutions. Revenue from Infinity increased by a double-digit percentage last quarter, which was faster than the company's overall revenue growth.
Check Point says that AI-powered tools such as Infinity Copilot are being used by "thousands of organizations" globally. That's not surprising, as the adoption of AI in the cybersecurity space is growing at a nice clip. Polaris Market Research estimates that AI usage in cybersecurity could grow at an annualized rate of 24% through 2034. So, don't be surprised to see Check Point's AI tools gaining more traction among customers and driving stronger growth in revenue.
On the other hand, Check Point is also offering AI-enabled firewall appliances known as Quantum Force to help customers automate their network security. The company launched Quantum Force near the beginning of 2024, and now sees it as the primary driver of its revenue growth. Specifically, Check Point's product and license revenue increased by an impressive 14% year over year last quarter thanks to the growing uptake of its Quantum Force firewall appliances.
All this indicates that Check Point Software could see stronger growth in the future, and this is what analysts predict as well.
Expect healthy gains from this cybersecurity stock
Check Point Software now trades at just under 22 times forward earnings. That's lower than the tech-heavy Nasdaq-100 index's forward earnings multiple of 24.5 (using the index as a proxy for tech stocks). If in the future the stock trades in line with the index's valuation thanks to its improving earnings growth, and and if it hits analysts' expected earnings level of $11.97 per share by the end of 2027, its stock price -- currently around $217 -- would jump to about $293.
That would be a 35% jump from current levels. Additionally, don't be surprised to see Check Point stock delivering stronger gains than that, as it seems capable of clocking faster earnings growth thanks to its improving revenue pipeline, which is why investors can still consider buying this cybersecurity stock in anticipation of more upside.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Check Point Software Technologies. The Motley Fool has a disclosure policy.
