CrowdStrike’s cloud-native cybersecurity business is booming.
Zscaler leads the cloud-native “zero trust” market.
Palo Alto Networks’ cloud and AI cybersecurity businesses are expanding.
10 stocks we like better than CrowdStrike ›
With the S&P 500 trading at a historically high 31 times earnings, investors may be considering a shift from higher-growth stocks to more conservative investments. That might be the prudent move, but investors who don’t plan to sell their stocks for at least a few more years should still accumulate promising growth plays in evergreen sectors.
One of those sectors is the cybersecurity market, as most companies won’t compromise their digital defenses to save a few dollars. That’s why Fortune Business Insights expects the global cybersecurity market to still expand at a steady CAGR of 13.8% from 2026 to 2034. To capitalize on that trend, consider investing in these three stalwarts of the sector: CrowdStrike(NASDAQ: CRWD), Zscaler(NASDAQ: ZS), and Palo Alto Networks(NASDAQ: PANW).
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Many cybersecurity companies install their software through on-site appliances; however, this approach requires a significant amount of space, consumes a substantial amount of power, and necessitates constant maintenance. To address these issues, CrowdStrike bundles its endpoint security services into Falcon, a cloud-native platform that doesn’t require any on-site appliances. Falcon is easier to scale, can be updated remotely, and locks its customers into sticky recurring subscriptions.
CrowdStrike now serves over 30,000 subscription customers, including 70 of the Fortune 100 companies. Each of those customers starts with a set of four cloud modules, but 49% of its customers had adopted at least six of its modules in its latest quarter. That expansion indicates it’s successfully cross-selling additional modules to boost its revenue per customer. It’s also upgrading its platform with Charlotte, its new generative AI tool, which streamlines the threat detection process. Additionally, new AI modules are being introduced for Falcon and Falcon Flex — its more flexible subscription plan, which allows customers to add and remove modules as needed.
From fiscal 2025 (which ended in January 2025) to fiscal 2028, analysts expect its revenue and adjusted earnings per share (EPS) to grow at a CAGR of 22% and 17%, respectively. Its stock might seem pricey at over 100 times next year’s earnings. Still, its early mover’s advantage in the cloud native space, scale, and robust growth rates arguably justify that premium valuation.
Zscaler is another cloud-native cybersecurity company that doesn’t install any appliances. It specializes in “zero trust” services, which treat everyone — including a company’s CEO — as a potential threat unless they verify their credentials. It serves more than 7,700 customers and secures over 500 billion transactions daily.
Zscaler plans to ramp up its enterprise and public sector deployments, expand its AI-powered ZDX Copilot platform, and deepen its integrations with CrowdStrike and other cybersecurity leaders to reach a broader range of customers. It also acquired Red Canary last August to expand its ecosystem with more managed threat detection tools.
From fiscal 2025 (which ended in July 2025) to fiscal 2028, analysts expect Zscaler’s revenue and adjusted EPS to grow at a CAGR of 21% and 18%, respectively. Its stock might not seem like a bargain at 62 times this year’s earnings, but it could have plenty of room to grow as it dominates its niche of cloud-based zero trust services while expanding into adjacent markets.
Palo Alto Networks is one of the world’s largest cybersecurity companies. It serves more than 70,000 enterprise customers globally, including nine of the Fortune 10 companies. It splits its ecosystem into three main platforms: Strata, which houses its older network security services; Prisma, which handles its cloud-based security tools; and Cortex, which develops AI-powered threat detection services. Prisma and Cortex, collectively referred to as its “next-gen security” (NGS) services, have driven most of its growth over the past few years.
Palo Alto continues to expand its ecosystem with significant investments and acquisitions. It’s in the process of acquiring CyberArk(NASDAQ: CYBR), a leading provider of privileged access management (PAM) services, in a $25 billion deal slated to close in fiscal 2026 (which started last August). It also recently agreed to acquire Chronosphere, a provider of data observability services, for $3.35 billion to strengthen its AI analysis and cloud monitoring capabilities.
From fiscal 2025 to fiscal 2028, analysts expect Palo Alto’s revenue and adjusted EPS to grow at a CAGR of 14% and 13%, respectively. However, those estimates could be too conservative because they don’t fully account for its planned acquisitions. Its stock isn’t cheap, at nearly 50 times its forward-adjusted earnings, but it’s still one of the most balanced plays on the growth of the cybersecurity market.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
3 Top Cybersecurity Stocks to Buy in January was originally published by The Motley Fool
