Cybersecurity Stocks: Cloud Application Security Boom Expected – Investor's Business Daily
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You may think the time is right to move into cybersecurity stocks amid high profile hacking incidents. Also, buzz surrounding artificial intelligence is driving investor interest in cybersecurity stocks. And, federal government spending on cybersecurity should provide a boost in 2024, analysts say.
As of July 8, the Computer Software-Security group ranked No. 46 out of 197 industry groups that IBD tracks, improving from No. 57 a week earlier.
Among cybersecurity stocks, Palo Alto Networks (PANW) and CyberArk (CYBR) trade near entry points.
PANW stock trades 1% below a cup-with-handle entry point of 345.90. Palo Alto stock has gained 16% in 2024.
Further, CYBR stock trades 3% below an entry point of 283.
Meanwhile, CrowdStrike (CRWD) ranks No. 7 in the IBD 50 roster of growth stocks. CRWD stock has advanced 52% this year. But CRWD stock trades above a 5% buy zone. CrowdStrike stock joined the S&P 500 index in June.
Further, CrowdStrike and Palo Alto Networks are players in the cloud security market, which incudes Cloud Native Application Protection Platform (CNAPP) products and services.
Bank of America forecasts that the CNAPP market will grow from $7.2 billion in 2023 to $16.3 billion in 2027 — a 24% five-year compound annual growth rate.
“The CNAPP market is evolving rapidly and private companies (Wiz and Orca), once leading the space technologically, are seeing more established security vendors entering the space like Crowdstrike, Palo Alto Networks, Zscaler (ZS), Fortinet (FTNT) and others, all addressing it from different angles,” said a BofA report.
Market research firm IDC holds a similar outlook.
The cybersecurity market will grow double digits from 2023 to 2028, hitting $201 million in 2028, IDC forecasts. It predicts that the CNAPP will be the fastest growing product category over the five years.
Industry consolidation continues. Fortinet in June acquired Lacework, a cloud security company.
Some Wall Street analysts tout cybersecurity stocks with cloud-based platforms as the most likely market share gainers. Many companies aim to consolidate purchasing by buying from fewer security vendors, analysts say.
Further, cybersecurity firms with the highest Composite Ratings include CrowdStrike stock, Palo Alto Networks and CyberArk.
Cybersecurity stocks turned in mixed earnings results for March/April quarters.
Meanwhile, first quarter earnings for CRWD stock topped expectations.
Further, Palo Alto Networks reported fiscal Q3 that missed Wall Street targets.
Also, shares in Fortinet fell after its first quarter billings growth missed estimates. Shares in Cloudflare (NET) tumbled on its weak revenue outlook. NET stock has gained 4% in 2024.
The big picture: cybersecurity services delivered via cloud computing platforms are in favor. Many companies are moving away from on-premise computer network “firewall” appliances.
The cybersecurity stocks have thrived despite growing competition from cloud computing giant Microsoft (MSFT). Microsoft aims to integrate artificial intelligence tools into its security platform. Called Microsoft Security Copilot, the platform uses a new AI assistant.
With its Mandiant acquisition, Google-parent Alphabet (GOOGL) also is making a big cybersecurity push. Mandiant is working with software maker Snowflake (SNOW), which experienced a hacking incident.
On June 20, the Department of Commerce’s Bureau of Industry and Security announced a final determination prohibiting cybersecurity software provider Kaspersky from providing anti-virus software and security products or services in the U.S.
The U.S. ban could benefit CrowdStrike, Microsoft, and SentinelOne (S), analysts say.
The recent hacks on UnitedHealth Group and casino operators MGM Resorts (MGM) and Caesars Entertainment (CZR) underlined worries that generative AI will increase ransomware attacks.
Meanwhile, the Securities and Exchange Commission has new disclosure rules for public companies. The rules require companies to report hacking incidents within four business days if they have a material impact on operations.
Meanwhile, both computer security firms and hackers are expected to make use of generative AI tools. Here’s a look at the AI cybersecurity battle.
Cybersecurity firms expect generative AI tools to help reduce the time to detect and respond to many forms of computer hacking. Also, they see generative AI automating more functions in security operations centers to help companies deal with a shortage of software engineers.
Analysts say a new wave of startups is taking share from industry incumbents. They include Netskope, Wiz, Snyk, Lacework and Illumio. Analysts say others to watch include Vectra AI, Venafi, Recorded Future, Noname Security, Obsidian Security, Deep Instinct and Skyflow. The startups pressure incumbents into higher research and development spending.
Funding continues to go to cybersecurity startups. Cloud security firm Wiz recently raised $300 million at a $10 billion valuation.
Private-equity firms remain active. Thoma Bravo in October 2022 agreed to buy ForgeRock for $23.25 a share in an all-cash deal valued at about $2.3 billion. The deal represented a 53% premium to ForgeRock’s closing share price on Oct. 10. The deal is expected to close in the first half of 2023.
Earlier, Thoma Bravo acquired Ping Identity Holdings (PING) for $2.8 billion. Thoma Bravo also has acquired cybersecurity firms SailPoint Technology, Proofpoint, Sophos and Barracuda. The private equity firm has invested in cybersecurity startups, such as Illumio.
Also, private-equity firm Permira in May completed its purchase of Mimecast for $5.8 billion.
Further, Google in 2022 acquired Siemplify, a security orchestration, automation and response provider, for around $500 million.
Still, some computer security firms could get a boost from new federal government initiatives.
The Cyber Incident Reporting Act of 2023 requires agencies, federal contractors and critical infrastructure operators to notify the Department of Homeland Security when a data breach is detected, a significant step in building security.
In addition, Ransomware remains a big threat.
Further, it behooves an investor to know which cybersecurity stocks address ransomware, phishing or other kinds of cyberattacks.
Meanwhile, CrowdStrike uses machine learning and a specialized database to detect malware on laptops, mobile phones and other devices that access corporate networks.
In addition, many software companies are using artificial intelligence to get a competitive edge.
In addition, Zscaler is the biggest provider of cloud-based web security gateways that inspect customers’ data traffic for malware.
Other cybersecurity firms with a sizable government business include Tenable (TENB), Rapid7 and CyberArk. Tenable in 2021 acquired France-based Alsid, which focuses on identity access management.
In addition, Rapid7 (RPD) and Qualys (QLYS) specialize in vulnerability management services.
Amid the rapid global spread of Covid-19, many companies instructed employees to work from home. That has increased demand for computer security products that support remote work.
The coronavirus emergency and shift to remote work has accelerated the growth of cloud-based network security. So the industry now has a new term for the infrastructure that supports distributed workers and branch offices.
Corporate America has hiked tech spending on security aiming to protect intellectual property as well as consumer privacy. Hackers continue to steal credit card data and intellectual property.
Spending on security technologies has evolved as companies shift business workloads to cloud computing service providers. Amazon Web Services, part of Amazon.com (AMZN), is the biggest cloud services firm. Amazon looms as a potential rival to companies like Cloudflare as it builds more security tools into its cloud services.
Also, Fortinet competes with Palo Alto Networks and others in the firewall security market. Firewalls reside between private networks and the internet. They block unauthorized traffic and check web applications for malware.
As large companies shift to off-premise cloud computing services, one view is that firewall technology will play a lesser role. Fortinet has targeted software-defined wide area networks, or SD-WANs, an emerging computer networking technology.
Further, cybersecurity stocks span a wide-range of products and services.
Also, many fast-growing cybersecurity firms are in the endpoint market. Their tools detect malware on laptops, mobile phones and other devices that access corporate networks.
Meanwhile, hackers often aim to compromise networks by targeting employees or management who have administrative access. CyberArk manages privileged accounts. In addition, Okta provides identity verification services.
To slow down hackers, more companies are focusing on internal security threats though a strategy known as Zero Trust. In addition, traditional security measures aim to keep the bad guys out of corporate networks. Further, network firewalls focus on intruders from the public internet.
Zero Trust cybersecurity models focus on internal threats, such as hackers stealing someone’s security credentials. Security firms verify the identity of network users and limit access to applications.
Also, investors might consider the Global X Cybersecurity ETF (BUG) for a more broad exposure to the sector.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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Get Free IBD Newsletters: Market Prep | Tech Report | How To Invest
7/14/2024 Google-parent Alphabet reportedly is close to a deal to buy cybersecurity startup Wiz for $23 billion, which would be its…
7/14/2024 Google-parent Alphabet reportedly is close to a deal to buy…
The sharp growth in big data centers to handle AI demands has an unexpected beneficiary: nuclear power. (© Jon Krause)
Get instant access to exclusive stock lists, expert market analysis and powerful tools with 2 months of IBD Digital for only $20!
Get market updates, educational videos, webinars, and stock analysis.
Learn how you can make more money with IBD’s investing tools, top-performing stock lists, and educational content.
Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.
*Real-time prices by Nasdaq Last Sale. Realtime quote and/or trade prices are not sourced from all markets.
Ownership data provided by Refinitiv and Estimates data provided by FactSet.
© 2000-2024 Investor’s Business Daily, LLC. All rights reserved
This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
You may think the time is right to move into cybersecurity stocks amid high profile hacking incidents. Also, buzz surrounding artificial intelligence is driving investor interest in cybersecurity stocks. And, federal government spending on cybersecurity should provide a boost in 2024, analysts say.
As of July 8, the Computer Software-Security group ranked No. 46 out of 197 industry groups that IBD tracks, improving from No. 57 a week earlier.
Among cybersecurity stocks, Palo Alto Networks (PANW) and CyberArk (CYBR) trade near entry points.
PANW stock trades 1% below a cup-with-handle entry point of 345.90. Palo Alto stock has gained 16% in 2024.
Further, CYBR stock trades 3% below an entry point of 283.
Meanwhile, CrowdStrike (CRWD) ranks No. 7 in the IBD 50 roster of growth stocks. CRWD stock has advanced 52% this year. But CRWD stock trades above a 5% buy zone. CrowdStrike stock joined the S&P 500 index in June.
Further, CrowdStrike and Palo Alto Networks are players in the cloud security market, which incudes Cloud Native Application Protection Platform (CNAPP) products and services.
Bank of America forecasts that the CNAPP market will grow from $7.2 billion in 2023 to $16.3 billion in 2027 — a 24% five-year compound annual growth rate.
“The CNAPP market is evolving rapidly and private companies (Wiz and Orca), once leading the space technologically, are seeing more established security vendors entering the space like Crowdstrike, Palo Alto Networks, Zscaler (ZS), Fortinet (FTNT) and others, all addressing it from different angles,” said a BofA report.
Market research firm IDC holds a similar outlook.
The cybersecurity market will grow double digits from 2023 to 2028, hitting $201 million in 2028, IDC forecasts. It predicts that the CNAPP will be the fastest growing product category over the five years.
Industry consolidation continues. Fortinet in June acquired Lacework, a cloud security company.
Some Wall Street analysts tout cybersecurity stocks with cloud-based platforms as the most likely market share gainers. Many companies aim to consolidate purchasing by buying from fewer security vendors, analysts say.
Further, cybersecurity firms with the highest Composite Ratings include CrowdStrike stock, Palo Alto Networks and CyberArk.
Cybersecurity stocks turned in mixed earnings results for March/April quarters.
Meanwhile, first quarter earnings for CRWD stock topped expectations.
Further, Palo Alto Networks reported fiscal Q3 that missed Wall Street targets.
Also, shares in Fortinet fell after its first quarter billings growth missed estimates. Shares in Cloudflare (NET) tumbled on its weak revenue outlook. NET stock has gained 4% in 2024.
The big picture: cybersecurity services delivered via cloud computing platforms are in favor. Many companies are moving away from on-premise computer network “firewall” appliances.
The cybersecurity stocks have thrived despite growing competition from cloud computing giant Microsoft (MSFT). Microsoft aims to integrate artificial intelligence tools into its security platform. Called Microsoft Security Copilot, the platform uses a new AI assistant.
With its Mandiant acquisition, Google-parent Alphabet (GOOGL) also is making a big cybersecurity push. Mandiant is working with software maker Snowflake (SNOW), which experienced a hacking incident.
On June 20, the Department of Commerce’s Bureau of Industry and Security announced a final determination prohibiting cybersecurity software provider Kaspersky from providing anti-virus software and security products or services in the U.S.
The U.S. ban could benefit CrowdStrike, Microsoft, and SentinelOne (S), analysts say.
The recent hacks on UnitedHealth Group and casino operators MGM Resorts (MGM) and Caesars Entertainment (CZR) underlined worries that generative AI will increase ransomware attacks.
Meanwhile, the Securities and Exchange Commission has new disclosure rules for public companies. The rules require companies to report hacking incidents within four business days if they have a material impact on operations.
Meanwhile, both computer security firms and hackers are expected to make use of generative AI tools. Here’s a look at the AI cybersecurity battle.
Cybersecurity firms expect generative AI tools to help reduce the time to detect and respond to many forms of computer hacking. Also, they see generative AI automating more functions in security operations centers to help companies deal with a shortage of software engineers.
Analysts say a new wave of startups is taking share from industry incumbents. They include Netskope, Wiz, Snyk, Lacework and Illumio. Analysts say others to watch include Vectra AI, Venafi, Recorded Future, Noname Security, Obsidian Security, Deep Instinct and Skyflow. The startups pressure incumbents into higher research and development spending.
Funding continues to go to cybersecurity startups. Cloud security firm Wiz recently raised $300 million at a $10 billion valuation.
Private-equity firms remain active. Thoma Bravo in October 2022 agreed to buy ForgeRock for $23.25 a share in an all-cash deal valued at about $2.3 billion. The deal represented a 53% premium to ForgeRock’s closing share price on Oct. 10. The deal is expected to close in the first half of 2023.
Earlier, Thoma Bravo acquired Ping Identity Holdings (PING) for $2.8 billion. Thoma Bravo also has acquired cybersecurity firms SailPoint Technology, Proofpoint, Sophos and Barracuda. The private equity firm has invested in cybersecurity startups, such as Illumio.
Also, private-equity firm Permira in May completed its purchase of Mimecast for $5.8 billion.
Further, Google in 2022 acquired Siemplify, a security orchestration, automation and response provider, for around $500 million.
Still, some computer security firms could get a boost from new federal government initiatives.
The Cyber Incident Reporting Act of 2023 requires agencies, federal contractors and critical infrastructure operators to notify the Department of Homeland Security when a data breach is detected, a significant step in building security.
In addition, Ransomware remains a big threat.
Further, it behooves an investor to know which cybersecurity stocks address ransomware, phishing or other kinds of cyberattacks.
Meanwhile, CrowdStrike uses machine learning and a specialized database to detect malware on laptops, mobile phones and other devices that access corporate networks.
In addition, many software companies are using artificial intelligence to get a competitive edge.
In addition, Zscaler is the biggest provider of cloud-based web security gateways that inspect customers’ data traffic for malware.
Other cybersecurity firms with a sizable government business include Tenable (TENB), Rapid7 and CyberArk. Tenable in 2021 acquired France-based Alsid, which focuses on identity access management.
In addition, Rapid7 (RPD) and Qualys (QLYS) specialize in vulnerability management services.
Amid the rapid global spread of Covid-19, many companies instructed employees to work from home. That has increased demand for computer security products that support remote work.
The coronavirus emergency and shift to remote work has accelerated the growth of cloud-based network security. So the industry now has a new term for the infrastructure that supports distributed workers and branch offices.
Corporate America has hiked tech spending on security aiming to protect intellectual property as well as consumer privacy. Hackers continue to steal credit card data and intellectual property.
Spending on security technologies has evolved as companies shift business workloads to cloud computing service providers. Amazon Web Services, part of Amazon.com (AMZN), is the biggest cloud services firm. Amazon looms as a potential rival to companies like Cloudflare as it builds more security tools into its cloud services.
Also, Fortinet competes with Palo Alto Networks and others in the firewall security market. Firewalls reside between private networks and the internet. They block unauthorized traffic and check web applications for malware.
As large companies shift to off-premise cloud computing services, one view is that firewall technology will play a lesser role. Fortinet has targeted software-defined wide area networks, or SD-WANs, an emerging computer networking technology.
Further, cybersecurity stocks span a wide-range of products and services.
Also, many fast-growing cybersecurity firms are in the endpoint market. Their tools detect malware on laptops, mobile phones and other devices that access corporate networks.
Meanwhile, hackers often aim to compromise networks by targeting employees or management who have administrative access. CyberArk manages privileged accounts. In addition, Okta provides identity verification services.
To slow down hackers, more companies are focusing on internal security threats though a strategy known as Zero Trust. In addition, traditional security measures aim to keep the bad guys out of corporate networks. Further, network firewalls focus on intruders from the public internet.
Zero Trust cybersecurity models focus on internal threats, such as hackers stealing someone’s security credentials. Security firms verify the identity of network users and limit access to applications.
Also, investors might consider the Global X Cybersecurity ETF (BUG) for a more broad exposure to the sector.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
YOU MAY ALSO LIKE:
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
Learn How To Time The Market With IBD’s ETF Market Strategy
How To Use The 10-Week Moving Average For Buying And Selling
Get Free IBD Newsletters: Market Prep | Tech Report | How To Invest
7/14/2024 Google-parent Alphabet reportedly is close to a deal to buy cybersecurity startup Wiz for $23 billion, which would be its…
7/14/2024 Google-parent Alphabet reportedly is close to a deal to buy…
The sharp growth in big data centers to handle AI demands has an unexpected beneficiary: nuclear power. (© Jon Krause)
Get instant access to exclusive stock lists, expert market analysis and powerful tools with 2 months of IBD Digital for only $20!
Get market updates, educational videos, webinars, and stock analysis.
Learn how you can make more money with IBD’s investing tools, top-performing stock lists, and educational content.
Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.
*Real-time prices by Nasdaq Last Sale. Realtime quote and/or trade prices are not sourced from all markets.
Ownership data provided by Refinitiv and Estimates data provided by FactSet.
© 2000-2024 Investor’s Business Daily, LLC. All rights reserved
This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
