These Experts See Big Gains Ahead for a Set of Cybersecurity Stocks. Here’s Why

Forget the noise. While crypto bros are busy chasing the next memecoin pump, a different kind of digital gold rush is quietly unfolding. The smart money isn't just betting on blockchain—it's betting on the locksmiths.

The Unseen Bull Market

Every headline-grabbing data breach, every ransomware attack that shuts down a hospital, every state-sponsored digital incursion—they're not just crises. They're catalysts. They force boardrooms to open checkbooks. They turn cybersecurity from a line-item expense into an existential priority. The threat landscape isn't stabilizing; it's metastasizing. And that creates a market with only one direction: up.

Beyond the Firewall

The playbook has evolved. It's no longer just about building higher walls. The new frontier is in artificial intelligence that predicts attacks before they happen, in zero-trust architectures that assume the network is already compromised, and in cloud-native security that moves as fast as the businesses it protects. The companies solving these next-generation problems aren't just selling software; they're selling survival insurance in a world gone digitally mad.

The Analyst Consensus: A Rare Alignment

When was the last time you saw Wall Street analysts, institutional fund managers, and sector specialists all point in the same direction? It's happening now. Their thesis is brutally simple: demand is inelastic and accelerating. Whether the economy booms or stutters, the attacks don't stop. If anything, a downturn makes companies more vulnerable. This isn't a cyclical trade; it's a structural one.

So, while the finance world remains hypnotized by interest rate whispers and earnings minutiae, a more straightforward equation is being solved. In the arms race between offense and defense, the companies manufacturing the digital armor are poised to win—regardless of what the broader market does. Sometimes the safest bet is on fear itself.

Key Takeaways

• Wedbush analysts said they see big gains for a trio of cybersecurity plays that have taken a hit this year amid a broader slump in software stocks.
• The analysts identified Palo Alto Networks, CrowdStrike, and ZScaler as best-positioned to benefit from growing risks tied to AI.

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It's been a rough start to the year for the software sector, but one group of experts said they see big gains ahead for some beaten-down cybersecurity stocks.

As the use of AI spreads, companies could face growing risks that drive up demand for cybersecurity services, according to analysts at Wedbush, who named three stocks they see as likely "winners" in a note Tuesday.

Why This Matters to Investors

Wedbush is suggesting investors are underestimating the cybersecurity industry's opportunities for growth as AI risks spread, leaving shares of big players significant room to rise.

One of them is CrowdStrike (CRWD), which Wedbush said remains a "gold standard of cybersecurity" despite the stock's recent selloff. The shares are down about 13% year-to-date, with Wedbush's $600 price target suggesting nearly 50% upside from Tuesday afternoon's level around $408.

Wedbush also identified ZScaler (ZS) as a "premier name to own in the cyber space," with a strong product pipeline and AI strategy. The analysts said they see the stock roughly doubling to $350 in the next 12 months.

Palo Alto Networks (PANW), which is set to report earnings after the closing bell today, rounded out Wedbush's trio. The analysts said the company, which has sought to expand its offerings with several acquisitions recently, has seen its value proposition improve as companies look to consolidate vendors. Wedbush's price target at $225 is about 37% above the stock's recent level.

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Investors could also get more insights when ZScaler reports next week on Feb. 26, with CrowdStrike scheduled to release its latest quarterly results on March 3.

The three software stocks lost ground on Tuesday amid broader market losses. Read Investopedia's full daily markets roundup here.