Okta (OKTA) has put AI security in focus with the launch of Okta for AI Agents, a new platform designed to discover, register, and govern AI agents across enterprise environments in real time.

The recent Okta for AI Agents launch and board changes come against a mixed backdrop, with short term momentum improving, including a 1 month share price return of 9.17%, while the 1 year total shareholder return of 30.31% decline shows longer term pressure.

If AI security is on your radar, it can be useful to see what else is moving in this space and scan through 34 AI small caps

With Okta trading at US$81.10, sitting at a 27% intrinsic discount and roughly 24% below analyst price targets after a 30% 1 year total return decline, is there still a mispriced AI security story here, or is the market already baking in future growth?

Most Popular Narrative: 45.2% Undervalued

Okta's most followed valuation narrative, according to Tokyo, places fair value at $147.87 compared with the recent $81.10 close. This is a wide gap that immediately grabs attention.

Okta has a solid foundation: a technically brilliant solution, a strong market position and a recurring revenue model. But to be truly successful, Todd McKinnon needs to take strategic risks and further develop the business model.

Curious how this narrative gets to such a high fair value against a weak 1 year share return? The key assumptions juggle strong recurring revenue, rising margins, and a future earnings multiple that usually sits with more mature software leaders.

Result: Fair Value of $147.87 (UNDERVALUED)

However, this story can break if profitability stalls again or if the 30% 1 year total return decline reflects deeper concerns about Okta's long term earning power.

Another View: Price Tag Tension

That $147.87 fair value narrative suggests clear upside, but the market is sending a different signal. At the current $81.10 price, Okta trades on a 61x P/E, while the US IT industry sits at 19.4x and peers at 26.7x, with a fair ratio of 32x that suggests valuation risk if sentiment cools.

Next Steps

These mixed signals on price and sentiment will not settle themselves, so it makes sense to move quickly, review the data, and weigh the 3 key rewards

Ready for more investment ideas?

Do not stop with just one stock. Widen your watchlist now so you can spot opportunities early instead of hearing about them after the move.

• Target potential mispricings by reviewing companies that currently screen as 55 high quality undervalued stocks.
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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.