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In today’s digital era, where data is the new oil and cyber threats are ever-evolving, investing in cybersecurity stocks has become imperative for investors seeking robust long-term growth opportunities. As organizations and governments ramp up their cyber defenses, the demand for innovative cybersecurity solutions is skyrocketing, creating a lucrative market for forward-thinking investors. 

Key Takeaways:

• Top Performers: CrowdStrike, Palo Alto Networks, Zscaler, Fortinet, and Okta are among the top cybersecurity stocks to consider for 2024.
• AI and Automation: AI and automation are playing an increasingly large role in the cybersecurity industry, enhancing threat detection and response capabilities.
• Diverse Applications: These top stocks offer a range of cybersecurity solutions, from endpoint security to cloud security and identity management.

What is Cybersecurity?

Cybersecurity, also known as information technology security or electronic information security, is the practice of defending sensitive data, systems, and networks from malicious attacks, unauthorized access, and data breaches. It involves implementing processes, technologies, and best practices to protect against cyber threats and ensure the confidentiality, integrity, and availability of information.

Cybersecurity Market Growth:

• The cybersecurity market size is expected to grow from $172.32 billion in 2023 to $424.97 billion by 2030, at a CAGR of 13.8%.
• Global spending on security and risk management is set to increase 14.3% in 2024, outpacing overall IT spending growth of 8%.
• The cybersecurity market is projected to grow from $190.4 billion in 2023 to $298.5 billion by 2028, at a CAGR of 9.4%.
• Researchers estimate the total addressable market opportunity for cybersecurity could be as high as $1.5 trillion to $2 trillion, suggesting the current market is significantly underpenetrated.

Performance Comparison of Top Cybersecurity Stocks

Top 5 Cybersecurity Stocks to Buy

The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q2 2024 report.

1. CrowdStrike Holdings (NASDAQ: CRWD)

Number of Hedge Fund Holders (Q2 2024): 69

CrowdStrike is a prominent cybersecurity company specializing in cloud-delivered endpoint protection and threat intelligence. The company’s flagship product, Falcon, offers a comprehensive suite of endpoint security capabilities, including next-generation antivirus, endpoint detection and response (EDR), and managed threat hunting.

CrowdStrike’s Q2 fiscal 2025 results show impressive growth, with total revenue reaching $963.9 million, a 32% increase year-over-year. The company’s GAAP net income grew more than 5x to $47.0 million, while non-GAAP net income rose 45% to $260.8 million.

Free cash flow hit a record $272.2 million for Q2, demonstrating strong operational efficiency. CrowdStrike’s subscription revenue grew 33% to $918.3 million, indicating robust recurring revenue streams. The company added $217.6 million in net new ARR during the quarter.

According to insidermonkey, Ken Griffin’s Citadel Investment Group holds 1.5 million shares of CrowdStrike Holdings (CRWD), valued at $574.6 million.

CrowdStrike’s module adoption rates underscore its platform strategy success, with 65% of customers using five or more modules, 45% using six or more, and 29% using seven or more. This multi-module approach helps drive customer retention and expansion, contributing to the company’s overall growth in the cybersecurity market.

According to Wall Street Analyst on CRWD stock. Of the 51 analysts following the stock, 32 give it a Buy, 8 has it at Hold and 1 calls it a sell.

Why We Picked CrowdStrike:

• CrowdStrike is a leading provider of cloud-delivered endpoint protection and workload protection solutions, offering a unique, AI-powered approach to cybersecurity.
• The company’s Falcon platform delivers comprehensive protection and visibility across endpoints, cloud workloads, identity, and data, making it a preferred choice for organizations.
• CrowdStrike has demonstrated impressive financial performance, with consistent revenue growth and strong market demand for its products.

2. Palo Alto Networks (NYSE: PANW)

Number of Hedge Fund Holders (Q2 2024): 66

Palo Alto Networks is a leading provider of network security solutions, offering an extensive platform that includes firewalls, cloud security, and advanced threat detection capabilities. The company’s products are designed to protect organizations across diverse industries, including government, healthcare, and finance.

Palo Alto Networks reported impressive fiscal Q4 2024 results, with revenue growing 12% year-over-year to $2.2 billion. The company’s Next-Generation Security ARR surged 43% to $4.2 billion, while total fiscal year 2024 revenue reached $8.0 billion, a 16% increase from the previous year.

For fiscal 2025, the company projects revenue between $9.10 billion and $9.15 billion, representing 13-14% growth. Non-GAAP operating margin is expected to be 27.5-28.0%, with diluted non-GAAP net income per share forecasted between $6.18 and $6.31.

According to insidermonkey, Citadel Investment Group, led by Ken Griffin, holds a put position on Palo Alto Networks (NYSE: PANW) worth approximately $965.5 million, consisting of 2.85 million shares.

The company’s board authorized an additional $500 million for share repurchases, increasing the total authorization to $1 billion. Palo Alto Networks continues to invest in AI-powered solutions, with its Precision AI technology enhancing threat detection and response capabilities across its unified security platform.

According to Wall Street Analyst on PANW stock. Of the 53 analysts following the stock, 33 give it a Buy and 14 has it at Hold.

Why We Picked Palo Alto Networks:

• Palo Alto Networks is a leading provider of enterprise security solutions, offering a comprehensive platform that protects organizations across clouds, networks, and mobile devices.
• The company has a strong track record of innovation, consistently delivering cutting-edge products that address evolving cyber threats.
• Palo Alto Networks has a large and diverse customer base, including Fortune 500 companies and government agencies, providing a stable source of recurring revenue.

3. Zscaler (NASDAQ: ZS)

Number of Hedge Fund Holders (Q2 2024): 45

Zscaler is a leader in cloud security, offering a secure access service edge (SASE) platform that enables secure connectivity and delivers security services to users regardless of their location. The company’s platform protects organizations against cyber threats and ensures secure access to applications and data.

Zscaler’s Q4 fiscal 2024 results showcase its cybersecurity leadership. Revenue hit $592.9 million, up 30% year-over-year. The Zero Trust Exchange platform now processes over 500 billion daily transactions, a significant milestone in cloud security. Non-GAAP net income reached $140.6 million, demonstrating strong profitability.

The company’s financial health is evident in its $2.41 billion cash reserves. Deferred revenue grew to $1.89 billion, up 32% year-over-year, indicating strong future revenue potential. Zscaler’s customer base continues to expand, with increasing adoption among large enterprises seeking comprehensive security solutions.

According to insidermonkey, Two Sigma Advisors, led by John Overdeck and David Siegel, holds a $308.6 million position in Zscaler (NASDAQ: ZS), consisting of approximately 1.6 million shares.

For fiscal 2025, Zscaler projects revenue between $2.60-$2.62 billion and calculated billings of $3.11-$3.14 billion. The company’s AI-powered security innovations, including advanced URL categorization and data protection capabilities, position it well in the evolving cybersecurity landscape. Zscaler’s collaboration with industry leaders like NVIDIA further enhances its technological edge.

According to Wall Street Analyst on ZS stock. Of the 43 analysts following the stock, 25 give it a Buy and 13 has it at Hold.

Why We Picked Zscaler:

• Zscaler is a pioneer in cloud security, offering a unique cloud-native platform that enables secure digital transformation for organizations.
• The company’s zero-trust approach to security, which secures users, devices, and applications, is highly sought-after in the evolving work-from-anywhere environment.
• Zscaler has demonstrated impressive financial performance, with consistent revenue and subscriber growth, making it a solid choice for investors.

4. Fortinet (NASDAQ: FTNT)

Number of Hedge Fund Holders (Q2 2024): 42

Fortinet is a well-established cybersecurity company offering a broad range of network security solutions, including firewalls, secure access, and cloud security. The company’s FortiGate product line provides comprehensive security and networking functions, making it a popular choice for organizations seeking integrated security solutions.

Fortinet’s Q2 2024 results showcase its resilience in the cybersecurity market, with total revenue hitting $1.43 billion, an 11% year-over-year increase. Service revenue surged 20% to $982 million, while product revenue dipped 4.4% to $451.9 million. The company’s GAAP operating margin reached a record 30.5%, up from 21.6% in Q2 2023.

Deferred revenue grew 15% to $5.90 billion, indicating strong future earnings potential. Non-GAAP net income rose to $439.9 million from $300.4 million year-over-year, with diluted earnings per share increasing from $0.38 to $0.57. These figures underscore Fortinet’s improved profitability and operational efficiency.

According to insidermonkey, Fundsmith LLP, led by Terry Smith, holds a significant stake in Fortinet (NASDAQ: FTNT). Their investment of 10.29 million shares is valued at approximately $619.92 million.

Fortinet’s strategic focus on Unified SASE and Security Operations is paying off, with the company recognized in Gartner’s Magic Quadrant for Single-Vendor SASE. This positions Fortinet uniquely among competitors, as it’s the only vendor also featured in five different network security Magic Quadrant reports, highlighting its comprehensive cybersecurity offerings.

According to Wall Street Analyst on FTNT stock. Of the 42 analysts following the stock, 10 give it a Buy and 26 has it at Hold.

Why We Picked Fortinet:

• Fortinet is a leading provider of broad, integrated, and automated cybersecurity solutions, offering an extensive product portfolio that secures organizations’ digital infrastructures.
• The company’s FortiGuard Labs threat intelligence provides cutting-edge protection against advanced threats, making it a trusted choice for enterprises.
• Fortinet has demonstrated impressive financial performance, with consistent revenue and billings growth, positioning it well for the future.

5. Okta (NASDAQ: OKTA)

Number of Hedge Fund Holders (Q2 2024): 50

Okta specializes in identity and access management (IAM) solutions, enabling secure user authentication and access control. The company has a strong market presence and benefits from the increasing adoption of zero-trust security frameworks.

Okta reported Q2 2025 revenue of $646 million, up 16% year-over-year. The company achieved GAAP profitability with net income of $29 million, compared to a $111 million loss in Q2 2024. Free cash flow reached $78 million, representing 12% of total revenue.

In the cybersecurity realm, Okta’s focus on identity aligns with industry trends. The global identity and access management market is projected to grow from $13.41 billion in 2022 to $34.52 billion by 2028, at a CAGR of 14.12%.

According to insidermonkey, Whale Rock Capital Management, led by Alex Sacerdote, holds 2.4 million shares of Okta (NASDAQ: OKTA), valued at approximately $225 million.

Okta’s customer base grew to over 18,400 organizations, with a 122% dollar-based net retention rate. The company’s Workforce Identity Cloud and Customer Identity Cloud solutions address critical security needs, as 61% of data breaches involve credentials, according to the 2022 Verizon Data Breach Investigations Report.

According to Wall Street Analyst on OKTA stock. Of the 42 analysts following the stock, 16 give it a Buy and 22 has it at Hold.

Why We Picked Okta:

• Identity Management Expertise: Okta’s specialization in identity and access management is critical in the current digital landscape.
• Customer-Centric Approach: Okta’s solutions are highly scalable and user-friendly, appealing to a broad customer base.
• Strategic Partnerships: The company has formed strategic partnerships to enhance its service offerings and extend its market reach.

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Conclusion

The cybersecurity industry offers numerous investment opportunities, with CrowdStrike, Palo Alto Networks, Zscaler, Fortinet, and Okta standing out as the top stocks to buy in 2024. These companies are well-positioned to capitalize on the growing demand for cybersecurity solutions, making them attractive options for investors looking to secure their portfolios against the rising tide of cyber threats.

FAQs

1. Why should I invest in cybersecurity stocks?

Investing in cybersecurity stocks is a strategic move due to the increasing prevalence of cyber threats and the growing need for robust security solutions. The cybersecurity industry is projected to experience significant growth, making it a promising sector for investors.

2. What are the key factors driving the growth of the cybersecurity industry?

Key factors driving the growth of the cybersecurity industry include the rise in cybercrime, increased adoption of cloud services, and the integration of AI and automation in security solutions.

3. How do AI and automation impact the cybersecurity industry?

AI and automation enhance the cybersecurity industry by improving threat detection and response capabilities. These technologies enable faster and more accurate identification of threats, reducing the risk of cyberattacks.

4. What are the risks associated with investing in cybersecurity stocks?

Risks associated with investing in cybersecurity stocks include market volatility, competition, and the potential for technological obsolescence. It’s important to conduct thorough research and consider diversifying investments to mitigate these risks.

5. Are there any cybersecurity ETFs worth considering?

Yes, there are several cybersecurity ETFs that provide a simpler way to invest in a broad range of data security experts. Some top cybersecurity ETFs include the First Trust NASDAQ CEA Cybersecurity ETF (CIBR), ETFMG Prime Cyber Security ETF (HACK), and Global X Cybersecurity ETF (BUG).