Okta (OKTA) has drawn fresh attention after announcing deeper integrations with Google Cloud that extend its identity governance tools across AI agents and the Chrome Enterprise environment. This product expansion is shaping how investors view the stock.

The strong 30 day share price return of 32.31% and 90 day share price return of 50.25% suggest momentum has been building around Okta. However, the 1 year total shareholder return of 18.50% contrasts with a 5 year total shareholder return that remains down 52.14%, keeping recent gains in a longer term context.

If Okta’s AI focus has your attention, it could be a good moment to broaden your watchlist with other AI focused opportunities through the 33 AI small caps

With Okta now trading close to analyst price targets and showing an estimated 14% intrinsic discount, the key question is whether recent AI driven optimism has already been fully priced in or if there is still a genuine buying opportunity.

Most Popular Narrative: 22% Undervalued

Okta last closed at $117.81, while the most followed valuation narrative, according to Tokyo, points to a fair value of $151 that implies meaningful upside from here.

The question is no longer whether Okta can become profitable. The new question is whether Todd can unlock the next market: Identity and Access Management (IAM) for AI Agents. The strong share price reaction following the quarterly results suggests that investors are beginning to price in exactly this possibility. If every organization manages not only employees but also thousands of AI Agents in the future, Okta’s addressable market could become significantly larger than investors currently assume.

Curious what sits behind that $151 fair value for Okta? The narrative leans on steady revenue expansion, higher profit margins and a valuation multiple that assumes investors will pay up for that earnings profile.

Result: Fair Value of $151 (UNDERVALUED)

However, recent enthusiasm around Okta’s AI Agent opportunity could be tested if adoption of new identity products is slower than expected or if profitability momentum stalls.

Another View: Okta Looks Expensive On Earnings

The SWS DCF model points to Okta trading at a 14% discount to an estimated fair value of $136.99, which supports the idea of some undervaluation. But earnings based metrics tell a different story, with a current P/E of 82.9x versus a peer average of 39.6x and a fair ratio of 37.2x. That gap suggests investors are paying a steep premium, so how comfortable are you with paying up for this growth profile?

For a closer look at how that premium compares with peers and the fair ratio, and what it could mean for valuation risk, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Given the mix of optimism and caution around Okta, this is a moment to act quickly, review the full picture and weigh both sides using the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Okta?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.