Invest in Two Reliable Cybersecurity Shares for a Long-Term Investment Strategy across the Upcoming Decade
In the digital age, companies of all sizes must remain vigilant against the ever-evolving threat landscape. AI-powered attacks are making it increasingly challenging to protect data and customer privacy. Fortunately, some competent firms are rising to the challenge, and a handful of these cybersecurity companies could prove to be lucrative investments for the next decade. Let's take a look at two such stocks.
1. Palo Alto Networks
Palo Alto Networks, or PANW as it's commonly known, has been established in the cybersecurity sector for quite some time. With a wide range of offerings, from cloud protections with Prisma to an AI-based system with Cortex, Palo Alto is no one-trick pony.
With a customer base exceeding 80,000 enterprise customers and a solid set of Q1 fiscal 2025 results (showing a 14% revenue increase to $2.1 billion and a 13% non-GAAP diluted earnings per share rise to $1.56), Palo Alto looks set to continue its growth trajectory. Management anticipates revenue surpassing $9.1 billion for fiscal 2025, a 14% boost from its 2024 total.
However, it's worth noting that share prices for this company are pricey. Palo Alto trades at a forward P/E ratio of 56.8, which is substantially higher than the S&P 500's forward P/E ratio of 21.9. Yet, Palo Alto commands over 22% of the security appliance vendor market, outperforming industry titans Fortinet and Cisco.
2. CrowdStrike
CrowdStrike, or CRWD, has been at the forefront of cybersecurity innovation for years, offering cloud-based solutions for customers on its Falcon platform.
Recent developments include the introduction of Charlotte AI, an AI-driven tool that helps analysts evaluate threats. During the Q3 fiscal 2025 earnings call, management reported explosive growth in Charlotte AI usage, driven by overwhelming demand for its time-saving and streamlined workflow benefits.
The company managed to boost its revenue by a staggering 29% to a billion dollars in Q3, and its non-GAAP diluted earnings per share climbed by 13% to $0.93.
Like Palo Alto, CrowdStrike shares don't come cheap, boasting a forward P/E ratio of 78.4. However, the share price has seen a 8% decline over the past six months (as of this writing), meaning potential investors can acquire shares at a slightly lowered cost compared to mid-2024.
If the high P/E ratios of these cybersecurity stocks give you pause, you might consider initiating small positions and gradually increasing your investment over time as a practical approach. The AI-driven cybersecurity market is projected to balloon significantly in the coming decade, from a $14.9 billion value in 2021 to a whopping $133.8 billion by 2030, according to research by Acumen Research and Consulting. The market growth potential bodes well for both Palo Alto and CrowdStrike in the long run.
- Investors looking for opportunities in the rapidly growing cybersecurity sector might consider investing in Palo Alto Networks, as its forward-looking valuations show a P/E ratio of 56.8, slightly higher than the S&P 500's 21.9, yet the company commands a large market share.
- Maintaining strong financial performance, Palo Alto reported a 14% revenue increase to $2.1 billion in Q1 fiscal 2025, and a 13% non-GAAP diluted earnings per share rise to $1.56. With management projecting revenue surpassing $9.1 billion for fiscal 2025, investors might find the value proposition attractive despite the high valuations.
- Cybersecurity firm CrowdStrike, with a forward P/E ratio of 78.4, also has high valuations, but its share price has seen an 8% decrease over the past six months, potentially making it more affordable for investors interested in the AI-driven cybersecurity market.
- Both Palo Alto and CrowdStrike could benefit from the significant market growth projection, with the AI-driven cybersecurity market expected to expand from $14.9 billion in 2021 to $133.8 billion by 2030, as suggested by research by Acumen Research and Consulting, underscoring the long-term potential of these investors' choices.