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As the digital landscape continues to evolve, cybersecurity remains one of the most critical sectors for investment. With data breaches, ransomware attacks, and cyber threats on the rise, enterprises across the globe are prioritizing robust security solutions to safeguard their assets. This has created immense opportunities for companies operating in the cybersecurity space.
Despite a robust performance in 2024, cybersecurity stocks are anticipated to experience more moderate growth in 2025 as the software market recalibrates. Nevertheless, Jefferies sees resilience in the cybersecurity field, especially during the first half of next year.
The leading investment firm has identified several standout cybersecurity stocks that it believes are poised for growth in the coming year. The list includes some of the most prominent names in the sector: Zscaler (ZS), Palo Alto Networks (PANW), CrowdStrike (CRWD), SentinelOne (S), and CyberArk (CYBR). With that, let’s have a closer look at these stocks.
Cybersecurity Stock #1: Zscaler
Zscaler (ZS), with a market capitalization of $28.3 billion, is a prominent American cloud security company that safeguards enterprise networks and data. The company’s flagship platform, the Zero Trust Exchange, provides a range of cybersecurity solutions, such as cyber threat protection, data protection, zero trust connectivity, and business analytics.
In 2024, shares of the cloud-based cybersecurity platform underperformed, dropping 18.3% year-to-date.
Jefferies highlighted Zscaler as a high-growth opportunity, describing it as “among the best-placed for the future development of a software-driven consolidated IT Security market in a more distributed and cloud-based world.” Jefferies maintains a “Buy” rating on the stock and most recently raised its price target to $245 from $225 in late November.
On Dec. 3, ZS stock fell more than 4% despite the company reporting better-than-expected FQ1 results and boosting its full-year guidance. Zscaler’s revenue grew 26% year-over-year to $628 million, primarily fueled by an increase in users and additional subscription sales to existing customers. The top line exceeded both the high end of the company’s guidance and Wall Street’s consensus. Its adjusted EPS stood at $0.77, beating expectations by $0.14.
The post-earnings drop was likely due to a slower-than-expected acceleration in billings. Notably, calculated billings grew 13% year-over-year to $516.7 million. Nevertheless, Wall Street quickly came to the company’s defense, with analysts from Piper Sandler, Deutsche Bank, BofA, Goldman Sachs, and Citi, among others, raising their price targets on the stock.
It’s also important to note that the company has launched several AI-related security offerings, enhancing its long-term revenue prospects. In my view, the most notable offering is the one that facilitates the secure use of AI apps, enabling users to safely use chatbots, LLMs, and SLMs without the risk of compromising sensitive information.
Looking ahead, Zscaler boosted its full-year revenue guidance to a range of $2.62 billion to $2.64 billion, up from its previous forecast of $2.6 billion to $2.62 billion, signaling confidence in its growth trajectory.
Analysts tracking the company expect a 6.11% year-over-year drop in its adjusted EPS to $3.00 for fiscal 2025, while the company’s top line is projected to grow 21.72% year-over-year to $2.64 billion.
In terms of valuation, the stock’s forward price-to-sales ratio stands at 10.73x, which is above the sector median of 3.22x but below its five-year average of 23.82x. I believe the stock is not overvalued at current levels, given the business’s strong momentum and solid long-term growth prospects.
Analysts are optimistic about Zscaler’s prospects in the cybersecurity market, giving the stock a “Moderate Buy” rating on average. Out of the 39 analysts covering the stock, 25 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and 12 assign a “Hold” rating. The mean target price for ZS stock is $227.59, which is 23.3% above the Dec. 27 closing price.
Cybersecurity Stock #2: Palo Alto Networks
Palo Alto Networks (PANW) is a global leader in cybersecurity, dedicated to making each day safer than the last with its industry-leading, AI-powered solutions in network security, cloud security, and security operations. Its market cap currently stands at $122.2 billion.
In 2024, shares of the cybersecurity firm gained 23.6%, performing roughly in line with the broader market.
Jefferies analysts have described Palo Alto Networks as a must-own growth stock, pointing out that the company is expected to retain its leadership position in the market. The firm raised its price target on the stock to $240 from $225 and kept a “Buy” rating.
On Nov. 20, Palo Alto Networks reported robust FQ1 earnings. Its total revenue advanced 13.8% year-over-year to $2.14 billion, topping Wall Street’s expectations by $20 million. The growth was primarily driven by the subscription and support segment, where revenues increased due to higher demand for its subscription and support offerings from end customers. PANW posted an adjusted EPS of $1.56, beating the consensus by $0.08.
Palo Alto’s next-generation security Annual Recurring Revenue (ARR) increased by 40% year-over-year to $4.5 billion. Much of this growth can be credited to the company's successful strategy of platformization, which involves consolidating its single-point solutions into a unified platform that customers can purchase all at once.
Another key highlight is that PANW posted an increase in bookings, as demonstrated by the acceleration in total bookings’ growth to 21.5% (compared to 7.0% growth in the previous quarter and 0.9% growth in a year ago quarter), reaching $2.04 billion.
However, billings saw a sharp decline for the first time in the company’s history, falling 13% year-over-year. This capped the stock’s post-earnings rise to just over 1%.
For FY25, management lifted revenue guidance to $9.12 billion to $9.17 billion from $9.10 billion to $9.15 billion and raised adjusted EPS guidance to $6.26 to $6.39 from $6.18 to $6.31. Also, the company forecasts next-generation security ARR to be between $5.52 billion and $5.57 billion, indicating a year-over-year growth of 31% to 32%.
According to Wall Street estimates, PANW is expected to post a 12.06% year-over-year adjusted EPS growth to $3.18 in FY25. Also, Wall Street anticipates the company’s revenue to rise 14.03% year-over-year to $9.15 billion.
In terms of valuation, the stock’s forward price-sales ratio is 13.35x, well above the sector median of 3.22x and its five-year average of 9.14x. However, its closest competitor, CrowdStrike, trades at a significantly higher premium of 22.25x forward sales, indicating that PANW stock might achieve higher trading multiple if the company can continue on its growth path.
Analysts are overwhelmingly positive about Palo Alto’s future, as evidenced by a consensus “Strong Buy” rating. Among the 47 analysts offering recommendations for the stock, 34 recommend a “Strong Buy,” two give a “Moderate Buy” rating, and the remaining 11 advise holding. The average price target for PANW stock is $206.51, indicating an upside potential of 10.9% from the Dec. 27 closing price.
Cybersecurity Stock #3: CrowdStrike Holdings
Valued at a market cap of $87.4 billion, CrowdStrike Holdings (CRWD) revolutionizes the cybersecurity industry with the world’s most advanced cloud-native platform to protect critical enterprise risk areas - endpoints and cloud workloads, identity, and data. Its CrowdStrike Falcon platform, powered by the CrowdStrike Security Cloud and world-class AI, utilizes real-time indicators of attack, threat intelligence, evolving adversary tradecraft, and extensive telemetry from across the enterprise to deliver hyper-accurate detections, automated protection and remediation, top-tier threat hunting, and prioritized observability of vulnerabilities.
In 2024, shares of the cybersecurity company climbed 34%, outperforming the broader market.
Jefferies stated that CrowdStrike Holdings is an essential part of any growth stock portfolio. The firm lifted its price target on the stock to $450 from $415 and maintained a “Buy” rating, emphasizing CrowdStrike’s strong free cash flow margin and growth trajectory.
On Nov. 26, CrowdStrike reported stronger-than-expected Q3 results and boosted its full-year forecast. CrowdStrike generated revenue of $1.01 billion, up 29% year-over-year, beating Wall Street’s estimates by $26.97 million. This marked the first quarter in which the company exceeded $1.0 billion in revenue, impressing industry observers who note that the cybersecurity leader aims to sustain this momentum into FY26. The revenue growth was primarily fueled by the acquisition of new customers and higher sales of sensors and modules to existing customers. CrowdStrike’s adjusted EPS arrived at $0.93, compared to the consensus estimate of $0.81.
Meanwhile, CRWD’s ending ARR climbed 27% year-over-year to $4.02 billion, showcasing the company’s continued leadership despite a flawed update that crashed thousands of computers worldwide. Additionally, the dollar-based net retention rate was 115% as customers took advantage of the commitment packages and expanded their Falcon platforms. You can find my detailed analysis of the company’s Q3 results in the article I wrote in early December.
However, the positive aspects of the Q3 earnings report were overshadowed by conservative guidance for Q4, leading to the stock’s decline of over 4% in the subsequent trading session. Management anticipates Q4 revenue to be between $1.03 billion and $1.04 billion, with adjusted EPS expected to range from $0.84 to $0.86. While the midpoint of the revenue forecast topped analysts’ estimates, the midpoint of the profit forecast fell slightly short.
Management also lifted its full-year guidance, reflecting confidence that the July IT outage will have no lasting impact. Revenue is projected to be $3.92 billion-$3.93 billion, up from the previous range of $3.89 billion-$3.90 billion, while adjusted EPS is expected to range between $3.74 and $3.76, up from the prior forecast of $3.61 to $3.65.
Analysts tracking the company expect a 21.71% year-over-year growth in its adjusted EPS to $3.76 for fiscal 2025, while revenue is anticipated to rise 28.61% year-over-year to $3.93 billion.
Undoubtedly, CrowdStrike is not cheap from a valuation standpoint. Priced at 94.39 times forward adjusted earnings and 22.25 times forward sales, the stock trades at a substantial premium compared to the sector median levels. However, I believe CRWD’s valuation is justified, as the company continues to cement its status as a leader in the rapidly expanding cybersecurity industry. This positions it well to achieve the future earnings growth reflected in its premium valuation.
Analysts have a consensus rating of “Strong Buy” on CRWD stock, with an average price target of $380, indicating upside potential of 7% from the Dec. 27 closing price. Among the 44 analysts covering the stock, 34 rate it as a “Strong Buy,” three as a “Moderate Buy,” and seven assign a “Hold” rating.
Cybersecurity Stock #4: SentinelOne
With a market cap of $7.2 billion, SentinelOne (S) is a leader in cloud and AI security. The company offers endpoint security through AI software, safeguarding workstations, servers, and other devices against cyberattacks and malicious threats. Its AI-powered autonomous security platform, Purple AI, outperforms competitors by automating more processes, ensuring swift detection and reducing false positives.
In 2024, shares of the cybersecurity company dropped 19.2%.
Jefferies noted that SentinelOne is another standout choice in the cybersecurity industry. The firm upgraded S stock to “Buy” from “Hold” with a price target of $30, up from $27. Analysts at Jefferies pointed to improving fundamentals and potential catalysts, such as go-to-market changes and benefits from partnerships like Lenovo. The analysts predict a significant upside for the company in FY26, projecting a 23% growth in ARR.
On Dec. 4, SentinelOne released its FQ3 results that showed strong execution and business momentum. Still, the stock tumbled over 13% in the subsequent trading session, primarily because the company’s results did not show a significant boost following CrowdStrike’s outage in July.
SentinelOne’s revenue increased by 28.3% year-over-year to $210.6 million, mainly driven by sales to new customers and sales of additional endpoints and modules to existing customers. The figure slightly topped expectations by $0.88 million. ARR grew 29% year-over-year to $860 million. Notably, the number of customers with an ARR of $100,000 or more rose 24% year-over-year to 1,310, indicating a solid increase in interest among large enterprises for SentinelOne’s products.
Its GAAP gross margin improved year-over-year from 73.3% to 74.7%, underscoring its pricing power. Despite this, SentinelOne’s operating loss increased by 9.4% year-over-year to $89.1 million as the company invested in its platform to capitalize on the market opportunity created by CrowdStrike’s outage in July. S posted GAAP EPS of -$0.25, missing expectations by $0.05.
Meanwhile, the company’s adjusted EBITDA amounted to $10 million, compared to a loss of $3 million the previous year. S also achieved positive free cash flow on a trailing 12-month basis for the first time, a key milestone toward sustained profitability. It’s important to note that the company is reaching positive EBITDA and cash flow more quickly than peers such as Palo Alto and CrowdStrike. The two cybersecurity giants required over $2 billion in revenue to achieve positive margins, whereas SentinelOne is expected to reach this target with just $1 billion in revenue in FY26. This is likely due to the higher productivity delivered by AI-powered cybersecurity software.
Looking ahead, SentinelOne is guiding revenue of $222 million for Q4, leading it to boost its annual revenue forecast from $815 million to $818 million.
Analysts tracking SentinelOne expect the company to post GAAP EPS of -$0.76 for FY25, an improvement from a year ago. Also, analysts project S revenue to grow 31.74% year-over-year to $818.28 million.
In terms of valuation, the stock’s forward price-sales ratio stands at 8.82x, which is above the sector median of 3.25x. While valuation is high on an absolute basis, it remains reasonable in relative terms when compared to peers such as CRWD, PANW, and ZS.
Overall, analysts have deemed SentinelOne stock a “Strong Buy,” with a mean target price of $30.11, which indicates upside potential of 34.1% from the Dec. 27 closing price. Out of the 29 analysts covering the stock, 21 recommend a “Strong Buy,” one advises a “Moderate Buy” rating, and the remaining seven give a “Hold” rating.
Cybersecurity Stock #5: CyberArk
CyberArk (CYBR) is the global leader in identity security. Centered on Intelligent Privilege Controls, the company offers the most comprehensive security solutions for any identity - human or machine - spanning business applications, distributed workforces, hybrid cloud environments, and the entire DevOps lifecycle. CYBR’s market cap currently stands at about $14 billion.
In 2024, shares of the cybersecurity firm have performed exceptionally well, delivering outstanding returns of 53.2%.
Jefferies named CyberArk as its top pick for 2025. The firm has a price target of $400 on the stock. Jefferies said, “CYBR remains well-positioned to sustain momentum in 2025 given an elevated threat environment.” Growth is anticipated to be fueled by new customer acquisitions, maintenance conversions, and Venafi cross-sells, especially in the second half of 2025. The analysts forecast ARR growth in the low- to mid-20% range for the year.
On Nov. 13, CyberArk posted upbeat Q3 results and raised its full-year guidance. CYBR posted a record total revenue of $240.1 million, up 25.6% year-over-year, driven by a 43% increase in subscription revenue, beating the consensus estimate by $6.01 million. Its total ARR grew 31% year-over-year to $926 million. It’s important to note that subscription ARR is making up an increasingly larger percentage of total ARR each quarter. It rose 46% year-over-year to $735 million in Q3 and now constitutes 79% of total ARR, up from 78% last quarter. This should further bolster its top-line growth.
Meanwhile, CyberArk improved its adjusted gross margin by 210 basis points year-over-year to 80.3%, fueled by profitability in its subscription business. The company is achieving significant operating leverage as it shifts more of its revenue from one-time licensing sales to recurring subscription revenue. As a result, Non-GAAP operating income margin reached 15%, up from 9% in the same period last year. Its adjusted EPS came in at $0.94, beating expectations by $0.48.
On Oct. 1, CYBR closed the acquisition of Venafi, a machine identity security software company with approximately $150 million in recurring revenue, for $1.5 billion. This move broadens the firm’s presence in machine identity management at a time when an increasing number of enterprises are using AI models and agents to optimize operations. Management plans to focus on cross-selling the newly acquired Venafi features to its base of 8,500 existing customers.
Looking ahead, CyberArk raised its full-year guidance, expecting sales to range between $983 million and $989 million, up from the previously forecast range of $932 million to $942 million. Non-GAAP net income per share is also projected to be between $2.85 and $2.96, compared to the earlier range of $2.17 to $2.36.
According to Wall Street estimates, CyberArk’s Non-GAAP EPS is expected to skyrocket 163.31% year-over-year to $2.95 in FY24, while revenue is projected to grow 31.34% year-over-year to $987.52 million.
In terms of valuation, CyberArk’s forward price-sales ratio is 14.16x, above the sector median of 3.25x and its five-year average of 10.54x. However, I don’t believe that the stock is overvalued; instead, this premium likely reflects market confidence and the expected benefits from the Venafi acquisition.
Analysts have a consensus rating of “Strong Buy” on CyberArk stock. Among the 29 analysts covering the stock, the majority rate it as a “Strong Buy,” one as a “Moderate Buy,” and one advises holding. The average price target for CYBR stock is $352.89, indicating an upside potential of 10% from the Dec. 27 closing price.
