In an interview with Business Insider Paul Marino, Chief Revenue Officer at GraniteShares, highlighted that the cybersecurity industry is robust. Despite market fluctuations the sector is well-positioned to provide consistent returns to investors. GraniteShares, a firm that manages and invests assets totaling $5.2 billion, is a significant player in the investment world.
Resilience in the face of market volatility
Comparatively, cybersecurity companies rarely see a decline in demand. The private sector and government prioritize the secure storage of vital data, such as medical and financial records, in cloud-based systems. The Data Breach Report by the Identity Theft Resource Center highlights the importance of this need. It reports thousands of cybersecurity attacks with nearly 343 millions victims worldwide. Marino said, “This will continue to be a problem as long as we put data in the cloud.” Cybersecurity is a non-negotiable expense for companies. “Every single company must protect their data as well as their clients’ data.”
The cybersecurity sector is not fazed at all by volatile markets. Government entities continue to work to protect sensitive information amidst increasing cybersecurity attacks, geopolitical conflicts, and tensions. Geopolitical tensions can often force companies to retreat. You can never retreat from your security system. “You may even dig down when the going gets tough,” Marino added. He also stated that the frequency of cyberattacks by governments and foreign entities requires significant investment in cybersecurity measures.
Cybersecurity Investment Opportunities
Marino recommends four cybersecurity stocks to investors who want exposure to this resilient sector. These stocks are all part of the GraniteShares Nasdaq Disruptors ETF.
CrowdStrike Inc. (Nasdaq CRWD),
CrowdStrike, a leading cybersecurity company, uses AI and threat intelligence for ultra-accurate detections of enterprise risks in the areas of identity, data and cloud storage. The stock has risen over 58% in the year-to date (YTD) period, closing at $386.76 June 25. CrowdStrike’s annual recurring revenue (ARR), which ended April 30, grew by 33% YoY to $3.65 Billion, with a net addition of $211.7 M in ARR during the quarter. The company’s cash flow increased to $322.5 millions, which is 35% of the overall revenues of $921.25 million, an increase of 33% YoY.
In the quarterly earnings release George Kurtz, CrowdStrike’s President and Chief Executive Officer, highlighted the company’s competitive advantage. He said, “The Falcon platform’s differentiated architectural design creates a wide moat of competitive advantage and uniquely enables CrowdStrike’s to solve the biggest cybersecurity, data, and IT problems in the industry. Customers of all sizes are standardising the Falcon platform in order to achieve better security outcomes.” CrowdStrike’s CFO Burt Podbere said, “The CrowdStrike Team delivered another exceptional quarter, driven by strong execution as customers consolidate on Falcon platform.”
During the third quarter, CrowdStrike announced new innovations in cloud and data security and strengthened partnerships with Amazon Web Services and Google Cloud. These partnerships aim to improve cybersecurity consolidation and minimise breaches within multi-cloud environments. CrowdStrike has also partnered up with Nvidia for the delivery of the chipmaker’s AI-based computing services via the CrowdStrike XDR platform. The management expects Q2 revenues to range between $958.3 and $961.2 millions.
Zscaler (Nasdaq: ZS)
Zscaler is a cloud security specialist, focusing on zero trust connectivity. reported revenue growth of 32% YoY to $553.2 millions for the quarter ending on April 30. This was driven by increased client interest in its Zero Trust Exchange Platform. Zscaler CEO Jay Chaudhry said, “We delivered a quarter that was driven by increasing customer interest in our Zero Trust Exchange Platform.” As threat actors continue to exploit firewalls, Zero Trust security is a top IT priority. An increasing number of businesses are adopting our platform.
Zscaler stock has increased by over 11% during the last month. It closed at $182.52 in June. The company has been active in acquiring other companies to enhance its capabilities. It acquired Avalor Technology in order to improve AI innovations through the integration of its data repository with Avalor’s Data Fabric for Security. This allows proactive vulnerability tracing. Zscaler also acquired Airgap Network in order to combine Airgap’s agentless segmentation with its Zero Trust SD WAN, enhancing Zero Trust for IoT devices, critical infrastructure, and critical infrastructure.
Zscaler has also added a new AI assistant to its Zscaler Digital Experience Service, ZDX Copilot. This assistant can quickly evaluate and harness knowledge from more than 500 trillion data points. It provides valuable insights to IT Operations, Service Desk, and Security teams. Zscaler’s management expects revenue to range between $565 million and 567 million for the next quarter.
Fortinet (Nasdaq : FTNT).
Fortinet’s stock has grown significantly in the past five years. It closed above $58 on Friday, June 25. The global leader in networking cybersecurity reported an increase of 7.2% YoY in revenue to $1.35 billion during the quarter ending March. Management expects billings will rise to $1.55billion in the next quarter despite a 6.4% YoY decrease in billings. Revenue guidance is between $1.375billion and $1.435billion.
“We are diligently executing a strategy to leverage our size, go-to market capabilities, customer-first approach, and engineering expertise in order to capitalise the fast-growing Unified SASE markets and Security Operations,” said Fortinet’s CEO Ken Xie. He described the Unified SASE as the most comprehensive offering in the industry. It leverages AI innovation and product integration within the FortiOS operating systems.
FortiAI is the first IoT Security Generative AI Assistant that Fortinet has deployed across its networking and security product lines. This assistant supports customers across over 30 languages. The company announced the acquisition of cloud security firm Lacework. This deal is expected to close in the second half of this year. This acquisition will integrate Lacework’s CNAPP (cloud native application protection platform) into Fortinet’s Unified SASE, providing clients with a comprehensive AI-driven cloud-security platform.
Palo Alto Networks (Nasdaq: PANW)
Palo Alto Networks shares have risen over 11% in value YTD and reached above $322 last week. The cybersecurity giant reported a 15% increase in total revenue YoY to $2 billion. GAAP net income also increased YoY from $107.8 to $278.8 millions. Dipak Golechha is the CFO at Palo Alto Networks. He said, “We have been disciplined in our execution and invested in go-to market and innovation.” “We delivered consistent and profitable growth in Q3 again and look forward to executing on our strategic goals and financial target as we close the year.”
Nikesh Arora, CEO of the company, stressed the long-term platformisation strategy to address the increasing sophistication of threats. Palo Alto Networks is a leader in developing solutions to counter AI-based cyber threats. It has recently launched products that secure AI from the start. Precision AI, its proprietary offering, uses machine-learning, deep learning and generative AI in order to protect networks and infrastructure.
Palo Alto Networks strengthened its partnership with Accenture in May to help companies adopt AI safely. This partnership combines Palo Alto Networks Precision AI technology with Accenture’s secure generative AI service, strengthening clients’ AI environments through the AI lifecycle. The company also partnered IBM to deliver AI powered security outcomes, streamlining operational, halting threats and accelerating incident resolution. This collaboration includes the acquisition of IBM’s QRadar SaaS and migration of QRadar SaaS customers to CortexXSIAM, Palo Alto Networks next-gen security operation platform with advanced AI-based threats protection capabilities.
Palo Alto Networks anticipates total revenues of between $2.15 and $2.17 billion for the next quarter. This represents a YoY increase of 10% to 11%.