6 Cybersecurity Stocks To Buy In 2025

The Growing Importance of Cybersecurity in Today’s Business Environment

In recent years, cybersecurity has emerged as a critical concern for businesses worldwide. According to a survey conducted by Chubb, a leading insurance company, executive leaders have identified cyber and technology risks as primary threats to business growth. Over 40% of respondents highlighted the importance of cyber threat monitoring within their organizations. This sentiment is not surprising, given the rapidly evolving cybersecurity landscape. The World Economic Forum has pointed out several factors contributing to this complexity, including the use of AI by hackers, rising geopolitical tensions, and the increasing number of data protection regulations. These challenges are creating a dynamic environment where cybersecurity is no longer just a secondary concern but a foundational aspect of business operations.

As the cybersecurity landscape continues to grow more complex, the demand for effective cybersecurity solutions is expected to rise. This trend presents significant opportunities for companies specializing in cybersecurity to thrive and gain a competitive edge. Established cybersecurity providers are well-positioned to become indispensable to their clients, allowing them to exert pricing power and drive growth. For investors, this presents a compelling opportunity to gain exposure to the cybersecurity sector, which is poised for continued expansion in the coming years.

Identifying Top Cybersecurity Stocks for Investment

To capitalize on the growth potential of the cybersecurity sector, investors need to identify companies that demonstrate strong fundamentals and a clear path to growth. A recent analysis focused on identifying top cybersecurity stocks by evaluating holdings within two prominent ETFs: the WisdomTree Cybersecurity Fund (WCBR) and the Global X Cybersecurity ETF (BUG). From these holdings, stocks were filtered based on specific criteria, including exclusion of foreign-listed stocks, stocks with fewer than 10 covering analysts, and those with consensus price targets that were not at least 10% higher than the current trading price. The remaining stocks were then ranked by free cash flow (FCF) per share, with the bottom three being eliminated from consideration.

This rigorous selection process yielded six cybersecurity stocks that are well-positioned for growth in 2025 and beyond. These companies were chosen based on their strong financial performance, market positioning, and growth potential. The analysis also considered key metrics such as FCF per share, forward price-to-earnings (P/E) ratio, revenue growth, and expected earnings per share (EPS) growth. By focusing on these factors, investors can make informed decisions about which cybersecurity stocks to include in their portfolios.

Akamai Technologies (AKAM): A Leader in Cybersecurity Solutions

Akamai Technologies is a prominent player in the cybersecurity space, offering a comprehensive suite of cloud computing, content delivery, and cybersecurity solutions. The company’s services include application and API security, bot and abuse protection, infrastructure security, and support for zero-trust strategies. Akamai’s client base spans multiple industries, including financial institutions, video streaming companies, healthcare providers, retailers, pharmaceutical firms, and even the U.S. military. This diverse customer base underscores the company’s versatility and broad market reach.

Akamai has consistently demonstrated its ability to drive sales and earnings growth, with a particularly strong operating margin. Recent earnings reports highlight the company’s momentum in security solutions and cloud computing, with 17% quarter-over-quarter sales growth in these areas. Analysts expect Akamai to sustain high-single-digit sales growth through 2028, with EPS projected to range from $6.50 to nearly $10 annually. These metrics make Akamai an attractive investment option for those looking to capitalize on the growth of the cybersecurity sector.

Zscaler (ZS): Pioneering Cloud Security

Zscaler operates a cloud-based security platform that has become the world’s largest inline security cloud platform. Founded in 2007, the company has achieved impressive year-over-year sales growth, averaging 48% annually over the past three years. Zscaler’s subscription-based model has attracted a diverse range of clients, including household and personal product companies, banks, transportation firms, hospitality businesses, and biotech organizations. Despite challenges in achieving GAAP earnings, Zscaler has demonstrated strong cash flow generation, with the second-highest FCF per share among the selected stocks.

In the most recent quarter, Zscaler reported 26% quarter-over-quarter revenue growth, driven by strong sales execution. The company’s operating cash flow reached $291.9 million, representing 53% of revenue, and the GAAP loss per share improved significantly. Zscaler’s ability to optimize its go-to-market strategies and upsell existing clients positions it as a key player in the cybersecurity landscape. While profitability remains a work in progress, Zscaler’s strong cash flow and market leadership make it a compelling investment opportunity.

Okta (OKTA): Secure Identity Solutions for the Digital Age

Okta is a leading provider of cloud-based identity solutions, enabling authenticated users to access multiple applications with a single login. The company serves more than half of the Fortune 100 companies, along with thousands of other organizations. Okta’s strong market positioning, growth history, and solid customer base make it a standout in the cybersecurity sector. Recent efforts to attract high-value contracts and innovate its offerings have further enhanced the company’s growth prospects.

Okta’s financial performance reflects its strong market position, with year-over-year revenue growth of 26.30% and expected revenue growth of 21.55% in the next year. The company is also nearing GAAP profitability, with expected EPS growth of 14.59% in the coming year. While Okta has faced challenges related to past data breaches, the company has made strides in addressing these issues and is now well-positioned for future growth. Investors may view Okta’s past challenges as a potential buying opportunity, given the company’s strong fundamentals and growth potential.

Datadog (DDOG): Monitoring and Optimizing Cloud Infrastructure

Datadog specializes in technology monitoring and logging services, helping clients manage, troubleshoot, and optimize their cloud-based IT infrastructure. The company’s platform is used by major organizations such as Samsung, Shell, Deloitte, Comcast, and Nasdaq. Datadog’s strong market position in cloud security is further enhanced by its integration with OpenAI, allowing customers to track the performance of AI-based applications.

The global cloud market is projected to grow at a compound annual growth rate (CAGR) of 21.2% from 2024 to 2030, driven by increasing demand for cloud-based solutions. Datadog is well-positioned to benefit from this growth, with a strong market presence and a platform that integrates seamlessly with AI technologies. Recent financial results highlight the company’s strength, with 26% quarter-over-quarter sales growth and FCF of $204 million. While some analysts have raised questions about Datadog’s potential in the AI monitoring space, the company’s long-term prospects remain promising, making it a solid investment choice.

Elastic N.V. (ESTC): Empowering Enterprises with Advanced Data Solutions

Elastic N.V. provides enterprise software that enables searching, analyzing, logging, and visualizing data. The company is best known for its Elasticsearch application, which is used by popular apps like Uber, Instacart, and Tinder. Elastic also offers an AI-powered security solution for detecting, investigating, and responding to cybersecurity threats. Analysts have highlighted Elastic’s strong position in both AI and cybersecurity, two rapidly growing industries.

Elastic’s financial performance has been impressive, with the company consistently beating earnings expectations. In the first two quarters of fiscal 2025, Elastic outperformed the EPS consensus by 36% and 55%, respectively. The company’s revenue grew by 18% in the second quarter, with a 59% increase in non-GAAP diluted EPS and a 16% increase in high-value customers. Elastic’s ability to deliver strong financial results and its leadership in AI and cybersecurity make it a top choice for investors looking to capitalize on the growth of these industries.

Rapid7 (RPD): Proactive Threat Management with AI

Rapid7 offers an AI-powered vulnerability management platform that proactively identifies and responds to security threats. The company serves over 11,000 customers, generating more than $820 million in annual recurring revenue. Rapid7 has recently achieved GAAP profitability, a significant milestone in the cybersecurity space. While some analysts have raised concerns about the company’s growth prospects, the average analyst earnings outlook for Rapid7 remains positive, with steady EPS growth expected from $2.31 in 2024 to $4.02 in 2029.

In the third quarter of 2024, Rapid7 reported 8% year-over-year sales growth and FCF of $39 million. The company’s ability to achieve profitability and its strong customer base make it an attractive investment option. While vulnerability management may not be the fastest-growing segment of the cybersecurity market, Rapid7’s proven track record and positive earnings outlook suggest that the company is well-positioned for continued success.

Conclusion: Investing in Cybersecurity for Long-Term Growth

The cybersecurity landscape is undergoing rapid transformation, driven by emerging technologies, geopolitical tensions, and evolving regulatory requirements. As a result, the demand for effective cybersecurity solutions is expected to grow significantly in the coming years. Companies that can deliver innovative and robust cybersecurity solutions will be well-positioned to thrive in this environment.

For investors, this presents a compelling opportunity to gain exposure to the cybersecurity sector. By focusing on companies with strong growth records, improving profitability, and a clear path to innovation, investors can make informed decisions about which cybersecurity stocks to include in their portfolios. Whether through individual stocks or cybersecurity ETFs, adding targeted cybersecurity exposure can provide a strategic advantage in today’s rapidly evolving business environment.