Cybersecurity stocks are often considered evergreen investments because most companies won't shut down their digital defenses just to save a few dollars. The rise of more sophisticated cyberattacks should also drive more organizations to upgrade their cybersecurity software.
From 2025 to 2030, Grand View Research expects the cybersecurity market to expand at a compound annual growth rate (CAGR) of 12.9%. But with so many different types of technologies and services, it can be tough for investors to separate the winners from the losers.
So today, let's discuss three growing cybersecurity companies -- Palo Alto Networks (PANW 1.92%), CrowdStrike (CRWD -0.11%), and SentinelOne (S) -- and see why they might still be worth buying this month even as the market hovers near all-time highs.
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Three different approaches to the cybersecurity market
Palo Alto Networks is one of the world's largest cybersecurity companies. It serves over 80,000 enterprise customers across three main platforms: Strata for its on-premise firewalls and network security services, Prisma for its cloud-based security services, and Cortex for its AI-powered threat detection tools. Most of its recent growth has been driven by Prisma and Cortex, which the company collectively refers to as its "next generation security" (NGS) services.
CrowdStrike differentiates itself from its peers by only providing its endpoint security tools as subscription-based cloud services. That makes it stickier and easier to scale than traditional cybersecurity platforms, which are installed through on-site appliances. Its main platform, Falcon, allows its customers to only subscribe to the modules they need. It serves more than 29,000 customers, including over half of the Fortune 1000 companies.
SentinelOne is a smaller newcomer that uses its AI algorithms to counter threats across its Singularity extended threat detection and response platform. But unlike Palo Alto Networks and CrowdStrike, which still party rely on human analysts, SentinelOne wants to replace all human analysts with its AI algorithms to boost Singularity's speed, accuracy, and efficiency. It served 1,459 larger customers (with over $100,000 in annual recurring revenue) in its latest quarter.
How fast are these three companies growing?
All three of these cybersecurity companies experienced slower growth over the past few years as rising interest rates and other macro headwinds made it tougher to land big new contracts. But instead of fretting over that slowdown, we should look ahead and see how fast they might grow.
From fiscal 2024 to 2027 (which ends in July 2027), analysts expect Palo Alto's revenue to rise at a CAGR of 14% and its and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at a CAGR of 17%. That growth should be driven by the consolidation of its network, cloud, and security tools into a unified AI-powered platform to lock in its larger customers, the ongoing expansion of its NGS services, and its future investments and acquisitions.
From fiscal 2025 to 2028 (which ends in January 2028), analysts expect CrowdStrike's revenue to increase at a CAGR of 22% and its adjusted EBITDA to rise at a CAGR of 27%. The biggest catalysts for its near-term growth include Charlotte, its generative AI tool for streamlining the threat detection process; new AI-enhanced modules for Falcon; and Falcon Flex, its flexible subscription-based plan that lets its customers add more modules as needed.
From fiscal 2025 to 2028 (which also ends in January 2028), analysts expect SentinelOne's revenue to grow at a CAGR of 20%. They also expect its adjusted EBITDA to turn positive this year. It should continue to gain more federal contracts as it expands its higher-growth Purple AI, Cloud Security, and Hyperautomation modules.
Are these three stocks still reasonably valued?
We should value higher-growth stocks based on their revenue instead of their earnings -- which can remain wobbly as they invest in the expansion of their ecosystems. By that measure, none of those stocks seem grossly overvalued yet. Palo Alto Networks trades at 12 times its projected sales for fiscal 2026 (which starts on Aug. 1). CrowdStrike trades at 25 times this year's sales, while SentinelOne looks the cheapest at less than 6 times this year's sales.
Based on those valuations, CrowdStrike might be ideal for growth investors. SentinelOne might appeal to the value-seeking contrarian investors, while Palo Alto Networks could be the most balanced play. All three of these stocks might remain volatile in this choppy market, but they could generate big long-term gains for investors who tune out the near-term noise.
