With more cyberattacks happening on a frequent basis, cybersecurity is paramount. In this video clip from "Ask Us Anything" on Motley Fool Live, recorded on May 5, Fool.com contributor Nick Rossolillo discusses three companies that are becoming important players in the industry.
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Nick Rossolillo: It's a new company, and it's growing fast. And so that's like the shiny object that investors are attracted to, right? Ooh, IPO! It's more than doubling in revenue every year! AI, cloud-native. I want to buy it! So, right? That's why Crowdstrike (CRWD -3.90%) is getting the premium, I think. A very large premium over and above its peers.
Fortinet (FTNT -0.98%), Palo Alto (PANW -1.22%), some other companies do this stuff too. ZScaler's (ZS -2.17%) another one too. They don't do endpoint security. They're more like cloud, web-based security. So it's a different product. Often times it'll be paired with something like Crowdstrike. So like your endpoint is secured, and then like your cloud platform is secured.
One area where Fortinet and Palo Alto Networks get overlooked is you still need to have firewalls as part of a security architecture because a lot of companies still have physical assets that need protecting. And specifically with the cloud, I'll mention this in particular: we think of the cloud as this nebulous thing that, you know, doesn't actually exist anywhere. Like we just pull it up on our phones and our computer and it's there. But at some point, there's a physical asset out there. There's a data center that is housing that information, that app that we're accessing, that service that we're using. There's a data center somewhere where that is housed, and you have to protect it.
And that's where Fortinet's growth is coming from and has been for years, but especially right now they've seen a big uptick in their product sales because of these expanding, you know, network of data centers. A lot of companies are upgrading their data centers, so they need to change out the hardware including the firewalls. And Fortinet also has a nice flywheel going for them too, where you know, they make the hardware sale, but they also have cloud-based software that pairs with it.
So, you know, they make the product sale, but they also sell the service as well. And so you kind of get a nice virtuous cycle there for companies like Fortinet and Palo Alto Networks. So it's not just Crowdstrike that is getting the boost from the secular growth trend. Some other companies are benefiting from that as well.
