Recently, those reports surfaced Lockheed Martina major defense contractor, was the target of a hack that may have exposed sensitive data, including information about its F-35 fighter jet. It’s clear why protecting private weapons data is important, but cybersecurity concerns are at the forefront of almost every business for a number of reasons.
So cybersecurity is likely to remain a key budget item for companies around the world, especially as artificial intelligence (AI) makes threats more cunning and sophisticated than ever.
The top cybersecurity companies are likely to take value in this market from their less innovative competitors, and these three look like screaming buys after the recent pullback.
Image source: The Motley Fool.
1. Falcon’s AI-forward platform makes this company an industry leader
Features of CrowdStrike Holdings (CRWD +0.39%) has been at the forefront of the industry for some time now. Its Falcon platform has expanded from its roots in endpoint security to become a versatile solution for tens of thousands of businesses. Falcon uses AI to analyze activity on a computer or device to detect suspicious patterns. It usually gets praise from market researchers like Gartner.
Modern Change
(0.39%) $1.53
Current Price
$394.84
Important Information Points
Market Cap
$100B
Location of the Sun
$387.00 – $400.09
52wk Range
$298.00 – $566.90
Volume
37K
Avg Vol
3.9M
Gross Margin
74.53%
The company’s module-based pricing model allows customers to tailor their services to their needs and creates natural cross-selling opportunities. By adding to its library of modules, CrowdStrike has increased its steadily expanding market to an estimated revenue of $149 billion, and management estimates that could rise to $325 billion in 2030. With $4.8 billion in total revenue over the past four quarters, it has a lot of room to grow.
CrowdStrike’s strong reputation has made its stock a high premium. It has sold at an average of more than 26 times sales over the past five years. However, the recent market turmoil has helped bring down sales to just 19 times. Investors may want to buy this dip to find an industry leader with a bright future.
2. This firewall leader is driving growth in the platform
Palo Alto Networks (PANW +0.67%) became a world leader in cybersecurity due to his expertise in firewalls. It now has over 70,000 customers worldwide. That is a huge customer base that the company is tapping into for growth. Its platform strategy is to lead the company to a unified security platform designed for the AI era.
Modern Change
(0.67%) $1.07
Current Price
$161.74
Important Information Points
Market Cap
$131B
Location of the Sun
$157.51 – $162.80
52wk Range
$139.57 – $223.61
Volume
1.7M
Avg Vol
11M
Gross Margin
73.50%
The company has been preparing for the AI era for a while now. The administration has created a laundry list of items, culminating in its recent $25 billion purchase of CyberArk to expand data protection. Protecting user identities will become more important in the AI age where virtual employees are flooded with network and internal processes.
The platform’s pivot has taken some time, but revenue growth should accelerate again, with management guiding for growth of 22% to 23% this year. The stock currently trades at less than 11 times trailing 12-month forward sales, a much lower price than CrowdStrike’s, though both have similar growth prospects.
3. Defense focused gameplay on agent AI
Unlike CrowdStrike and Palo Alto Networks, Zscaler (ZS +0.98%) is not a provider of various cybersecurity services. Instead, it specializes in cloud-native zero-trust security, a security strategy (not a product) that always verifies all private network connections. Zscaler generates $3 billion in annual sales from more than 9,400 customers worldwide.
Modern Change
(0.98%) $1.34
Current Price
$138.01
Important Information Points
Market Cap
$22B
Location of the Sun
$134.15 – $139.02
52wk Range
$128.00 – $336.99
Volume
41K
Avg Vol
2.7M
Gross Margin
76.28%
Grand View Research projects that the zero security market will grow at an annual rate of 16.5% until 2030 to reach $84 billion. Agetic AI will be a major driver of that growth. AI agents are still so new that there are serious security vulnerabilities. OpenClaw’s latest game has been fun, but some users have seen how a bad download or email can easily corrupt the OpenClaw agent.
Zscaler’s stock has been dubbed the “SaaSpocalypse,” falling along with many other software players due to investors’ fears that AI will weaken the competitive edge of SaaS companies. However, cybersecurity is an entirely different beast than traditional software applications. Zscaler is likely to thrive in the AI era, making it very expensive with only 7 times sales.
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