Cyber attacks are becoming more common and more expensive for businesses and organizations to remedy. In January 2023, T-Mobile suffered a hacker attack that affected 37 million customers’ data. In September, Johnson Controls, which sells building automation systems, such as industrial controls, air conditioning and fire safety equipment, had data stolen and faced a $51 million ransomware demand from the Dark Angels gang, Bleeping computer reported. The attack cost the Johnson Controls $27 million, it said later. That same month, MGM Resorts faced a $100 million loss, though some was covered by insurance, after hackers stole personal information from some of the company’s 10.6 million customers.
Businesses and organizations are realizing that they need to enlist help from specialist companies to mitigate cybersecurity threats. Statista estimates the worldwide cybersecurity market will expand to more than $500 billion by 2030 from about $300 billion in 2022, indicating substantial growth potential. The growth in artificial intelligence-generated cyberthreats means that cybersecurity will need to use artificial intelligence to keep up.
The global generative AI in cybersecurity market is expected to reach $146.9 billion by 2032 from $17.8 billion in 2023 at a compound annual growth rate (CAGR) of 26.4%, according to Dimension Market Research.
In this guide, we analysed 10 of the best cybersecurity stocks worth watching this year. Read on to see our picks.
First, here is an overview of the best cybersecurity stocks available in the stock market today:Best Cybersecurity Stocks to Buy in 2024
A Closer Look at the Top Cybersecurity Stocks to Invest in
Now, let’s take an in-depth look at the top stocks that are set to benefit from higher cybersecurity spending:
CrowdStrike Holdings has had three straight quarters of triple-digit earnings growth and just announced a deal with Google’s parent Alphabet (NASDAQ: GOOG) to expand on a partnership that combines CrowdStrike’s Falcon platform with the GoogleCloud Security Operations platform. The point is to help clients stay ahead of cyberthreats while using cloud technology and machine learning.
In the fourth quarter of fiscal 2024, its revenue rose 33% from the same quarter a year earlier to $845.3 million. Annual recurring revenue (ARR) was up 34% year over year to $3.44 billion. Net income was $53.7 million, compared to a loss of $47.5 million a year earlier. EPS was $0.22 compared to a loss of $0.20 per share.
CrowdStrike’s guidance also helped its shares rise as it said it expects fiscal 2025 revenue of between $3.925 billion and $3.989 billion, compared to $3.06 billion in 2024. It also said it expects non-GAAP income from operations of between $863.6 million and $913 million, compared to $751.8 million in 2024. The only concern about the stock is its valuation is more than 900 times earnings. Due to this, it may be worth waiting for a dip before buying it.
Ticker?
P/E?
Market Cap
NASDAQ: CRWD
935.39
$83.40 billion
2. CyberArk – Identity Management Firm Seizes Opportunity for Growth
CyberArk Software is making a big push with its $1.54 billion cash and stock purchase of Venafi, a machine identity company. The move will allow the US company to provide one-stop options for machine security, either as a SaaS or hybrid and will help it speed risk mitigation for companies looking to make their cloud computing environments more secure. CyberArk Software estimated that deal, which is expected to close by the end of the year, will add $150 million a year to annual recurring revenue.
The progress was strong enough for CyberArk Software to raise its annual guidance. It sees 2024 revenue of $928 million to $938 million, up 24% at the midpoint, while it said non-GAAP net income would be between $975 million to $990 million, up 26% at the lower end of the range. Over the past five years, the company has grown quarterly revenue by 121%. A favorite among Wall Street analysts with an average ‘Strong Buy’ rating, the stock is up 57% in the past year.
Ticker?
P/E?
Market Cap
NASDAQ: CYBR
N/A
$10.19 billion
3. Microsoft – Tech Giant Increases Focus on Cybersecurity?
The world’s most valuable company with market cap of $3.2 trillion, Microsoft is both a cybersecurity challenger and a challenge, in a sense. It provides protection from cyberattacks with zero trust security mechanisms across its product line and also, through its growing number of security offerings. However, it has also had a number of security failures in recent years and the Cyber Safety Review Board has been sharply critical of its security culture.
Like it or not, Microsoft, because of its size and connection to advanced AI, is a major player in cybersecurity. In the the third quarter of fiscal 2024, it saw revenue rise 17% year over year to $61.9 billion, and EPS climb 20% to $2.94.
Microsoft raised its quarterly dividend by 10% last year to $0.75 per share, the 19th consecutive year it has increased it. The stock’s shares have consistently outpaced the S&P 500 index over the past decade.
Ticker?
P/E?
Dividend Yield
NASDAQ: MSFT
36.95
0.70%
4. Palo Alto Networks – Grows Its Business Through Major Partnerships
Santa Clara, California-based Palo Alto Networks recently announced a big partnership with IBM (NYSE: IBM) that involves Palo Alto Networks acquiring IBM’s QRadar Software as a Service (SaaS) assets. IBM will coordinate the migration of its QRadar clients to Palo Alto’s Cortex XSIAM security operations, with advanced AI powered threat protection. The companies are establishing a joint security operations center and IBM’s WatsonX AI algorithms will be available to XSIAM. In addition, IBM will adopt Palo Alto’s security solutions internally and train its consulting organization on the technology.
In the fiscal third quarter revenue rose 15% year over year to $2 billion, and EPS jumped 154% to $0.79. All of the news wasn’t great, though, as some investors thought the company’s estimates for fourth-quarter billings of between $3.43 billion and $3.48 billion, representing a 9.5% increase at the midpoint was lackluster.?PANW stock tumbled as a result of the disappointing projection.
The rest of its guidance was more promising. The company expects full-year revenue of between $7.99 billion and $8.01 billion, which would mean year over year growth of 16% at the lower end of the range. It also projected full-year EPS of $5.56 to $5.58, up 25.4% at the midpoint.
?
Ticker?
P/E?
Market Cap
NASDAQ: PANW
45.42
$100.36 billion
5. A10 Networks – On the Recovery Trail
A10 Networks had a sluggish 2023 but appears to be slowly bouncing back. Between 2012 to 2022, revenue growth averaged 9%. It’s focusing on enterprise revenue growth and diversifying its customer base.
EPS totaled $0.13 compared to $0.05 a year earlier. It also bought back $3 million of its shares in the quarter. Enterprise customers accounted for 38% of the company’s business with service provider customers responsible for the rest.
The company has a relatively strong international presence with 45% of its revenue from the Americas, and 41% from the Asia Pacific and Japan region. The remaining 14% is from its work in Europe, the Middle East and Africa. Many cybersecurity stocks don’t offer a dividend, but A10, which was formed in 2004, is an exception. It raised its quarterly dividend by 20% to $0.06 in 2023.?
Ticker?
P/E?
Dividend Yield
NYSE: ATEN
25.59
1.61%
6. TrendMicro – Paring Down, Improving Profitability
TrendMicro announced in January that it was cutting 2% of its workforce. So far, the cuts seem to have helped its margins. The company focuses on cloud and enterprise security.
In the first quarter, it reported revenue of 65.9 billion yen ($427 million), up 12.3% from a year earlier, and EPS of 79.42 yen, up 33% year over year. It’s forecasting full-year 2024 revenue of 271 billion yen, which would mean a 9% increase and EPS of 255.05 yen, which would be up 225%.
TrendMicro offers a dividend and paid out 738 yen per share last year, a jump of more than 350% over the prior year. However, with a payout ratio of more than 600%, it likely won’t be able to continue raising the dividend.
Ticker?
P/E?
Dividend Yield
OTC: TMICY
65.30
10.58%
7. Cloudfare – Slowing Growth With Improved Profitability
After its stock price more than quadrupling in the past five years, Cloudfare is down more than 6% so far this year, as its guidance disappointed investors.That may be a good thing as the stock’s forward price-to-sales ratio (P/S) has dropped to 15.42, meaning that now may be a good time to scoop up the stock.
Its annual revenue has a CAGR of more than 46% over the past five years, and?in the first quarter, its revenue rose 30% year on year to $378.6 million. It posted a net loss of $35.3 million, compared to a loss of $38.1 million a year earlier. For fiscal 2024, it expects revenue of between $1.648 billion to $1.652 billion, which would mean an increase of 27.3% at the midpoint. It also forecast non-GAAP net income of $0.60 to $0.61, compared to $0.49 in 2023.
The company recently acquired Baselime, a cloud-native observability platform. By using Baselime’s technology, Cloudfare will help developers investigate bugs and improve performance in software releases.
Ticker?
P/E?
Market Cap
NYSE: NET
N/A
$25.01 billion
8. Check Point Software – Artificial Intelligence Deal With Nvidia
Check Point Software entered into a partnership in April with Nvidia (NASDAQ: NVDA) to enhance the security of AI infrastructure development and deployment in the cloud. The move is meant to provide a comprehensive solution that protects AI infrastructures from both conventional and new cyber threats. It’s also working with Microsoft, using the Microsoft Azure OpenAI Service to improve Check Point’s Infinity AI Copilot, which helps limit threats faster.
Sales of the company’s Harmony and Infinity email protection software led subscription revenue, which climbed 15% year over year in the quarter to $263 million. Business is a nearly even split between the Americas and the Europe, the Middle East and Africa markets.
In the first quarter, revenue rose 6% year over year to $599 million, while EPS was 2.04, rising 13%. The company also did $325 million in share repurchases in the quarter.
With subscriptions up, aggregate recurring revenues represent 83% of the company’s revenue. What is more, Check Point has no debt, putting it in a strong position to expand.
Ticker?
P/E?
Market Cap
NASDAQ: CHKP
21.35
$17.34 billion
9. Cisco Systems – Diversifying Its Business and a Built-In Edge
Cisco cybersecurity helps protect 840,000 networks, 67 million mailboxes and 87 million devices. The company has made big moves lately to shore up its cybersecurity offerings. Last fall, it bought cybersecurity firm Splunk for $28 billion and Cisco recently launched Cisco+Secure Connect, a turnkey Secure Access Service Edge subscription designed to simplify how organizations connect and protect users, devices and applications.
Financially, Cisco has been struggling, but the company is too big to count out and it presents the rare opportunity as a tech value stock. In the third quarter of fiscal 2024, revenue fell 13% year over year to $12.7 billion. EPS was $0.46, down 41%, thanks in part to the impact of the Splunk acquisition.
The company’s rebound may take a while. It’s predicting full-year revenue of between $53.6 billion and $53.8 billion, down from $57 billion last year, and EPS of between $2.46 and $2.51, compared with $3.89 in 2023. The company does reward patient investors, though, with an above-average quarterly dividend that it has raised for 12 consecutive years, including a 2.6% boost last year to $0.40. At less than 16 times earnings, the stock is attractively priced for a cybersecurity stock.
Ticker?
P/E?
Dividend Yield
NASDAQ: CSCO
15.67
3.44%
10. Okta – Continued Revenue Growth on the Road to Profitability
Okta shrugged off a media relations disaster when hackers gained access to its support case management system last fall. It’s not a good look for a cybersecurity company to have a breach. However, Okta’s identity management systems are becoming more necessary, thanks to the growing number of phishing attempts by hackers.
In fiscal 2024, the company saw revenue rise 22% to $2.263 billion, and subscription revenue increase 23% to $2.2 billion. The company hasn’t been profitable, but at least it’s making strides toward perhaps being profitable in fiscal 2024. It had a per-share loss of $2.17, compared to a loss of $5.17 a share in fiscal 2023.
Okta’s consistent double-digit revenue growth allowed it to predict another record full-year revenue in fiscal 2025. The company said it expects annual revenue to climb between 10% and 11% to between $2.495 billion and $2.505 billion, and non-GAAP net income per share to rise to between $2.24 and $2.29 from $1.60 in 2024.
Ticker?
P/E?
Market Cap
NASDAQ: OKTA
N/A
$16.49 billion
Are Cybersecurity Industry Stocks a Good Investment?
Yes, because data breaches are becoming more frequent, which will increase demand for their services and tools. According to the Identity Theft Resource Center, there were 3,205 data compromises last year, up 78% from 2022 and an all-time high. The need to protect organizations and individuals from data theft is expected to continue to drive demand for cybersecurity services. Global spending on cybersecurity is expected to be more than $250 billion in 2024.
Cybersecurity stocks are not monolithic. They run the gamut from those that focus on network security to those that focus on cloud security products, device security, or on data protection and access management. Network security: This sub-sector focuses on safeguarding computer networks from unauthorized access, intrusion, and malicious attacks. Companies in this space develop firewalls, intrusion detection and prevention systems and secure web gateways (SWG). Major players in the sub-sector include Palo Alto Networks A10 Networks and Microsoft. Cloud Security: As businesses migrate their data and applications to the cloud, securing cloud environments becomes paramount. Cloud security companies offer solutions for data encryption, access control, and identity management in the cloud. Some examples of the members of this sub-sector include? Cloudfare, TrendMicro, Akamai Technologies and Check Point Software. Endpoint Security: Companies in this sub-sector protect individual devices such as laptops, desktops, and mobile phones from malware, viruses, and other threats. Endpoint security solutions include antivirus software, endpoint detection and response (EDR) tools, and data loss prevention (DLP) technologies. CrowdStrike and Cisco belong to this sub-sector. Identity and Access Management (IAM): These cybersecurity companies attempt to manage user access to critical systems and data, providing tools for user authentication, authorization, and provisioning, ensuring that only authorized users have access to the right resources. Key examples include Okta and CyberArk.What Are the Sub-Sectors of Cybersecurity Stocks?
Are There Cybersecurity ETFs?
Yes. Using a cybersecurity exchange-traded fund (EFT) is one way to invest in cybersecurity stocks while enjoying the benefits of diversification within the sector. Some of the leading cybersecurity ETFs are:
First Trust NASDAQ CEA Cybersecurity ETF (NASDAQ: CIBR): It is the largest cybersecurity ETF with more than $6 billion in assets under management. It has 30 stocks that track the NASDAQ Cybersecurity Index, which is made up of companies that develop and sell cybersecurity products and services.
WisdomTree Cybersecurity Fund (NASDAQ: WCBR): This newer ETF tracks the WisdomTree Cybersecurity Index, which is designed to track the performance of companies primarily involved in providing cyber security-oriented products.
iShares Cybersecurity & Tech ETF (NYSEARCA: IHAK): This ETF offers a broader exposure to the cybersecurity industry and tracks the NYSE FANG Cybersecurity Index.
ETFMG Prime Cyber Security ETF (NYSEARCA: HACK): The 24-stock ETF looks for small-cap and mid-cap cybersecurity companies that are in the Nasdaq ISE Cyber Security Index.
Global X Cybersecurity ETF (NASADAQ: BUG): The fund seeks to provide results that correspond to the Indxx Cybersecurity Index and invests at least 80% of its total assets in this benchmark.
Where to Find Promising Cybersecurity Stocks & Insights
AltIndex is a subscription service that can provide AI-based cybersecurity stock picks along with news. AI-focused alternative data and other insights can help you make a informed investment decisions.
AltIndex includes web searches, customer satisfaction ratings, social media, and app downloads, to help it analyze a company. Its lists of best stocks update every half hour and also provide real-time updates on share prices. The lists use an AI score, taken from several datasets, to show which stocks are likely to make a big move and what is propelling that move.
AltIndex takes that information to compare similar stocks, using AI to find investment insights. Stocks are scored from 1 to 100, simplifying selections for investors.
AltIndex has more than 10,000 members and provides more than 100,000 stock insights and alerts each day, and has a strong win rate of 75% from its AI stock picks.
You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well many other useful features.
Conclusion
The ever-present threat of cyberattacks makes cybersecurity a critical industry with substantial upside. The global cybersecurity market is projected to surpass $500 billion by 2030, according to Statista, reflecting the growing demand for robust security defenses.
The cybersecurity landscape is diverse, offering opportunities to invest in various sub-sectors. For those seeking diversification, there are several cybersecurity ETFs, for instance the Global X Cybersecurity ETF and the First Trust NASDAQ CEA Cybersecurity ETF, which offer exposure to a basket of companies within the sector.
While the potential rewards are significant, cybersecurity stocks also come with risks. The evolving nature of cyber threats demands constant innovation, and companies that fail to adapt may struggle. Additionally, government regulations and high valuations can be factors to consider when investing in stocks within the sector.
References
https://www.trendmicro.com/en_us/about/investor-relations/financial-releases.html
https://www.reuters.com/markets/deals/cisco-acquire-splunk-28-billion-2023-09-21/
https://s2.q4cdn.com/951347115/files/doc_earnings/2024/q3/earnings-result/Q3FY24-Press-Release.pdf
https://www.usatoday.com/story/money/2024/01/25/data-breach-id-theft-protection/72352690007/
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Jim Halley
EditorI am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…
