These specialists anticipate significant growth for certain cybersecurity stocks. Here’s their reasoning.

Main Insights

• Wedbush analysts anticipate significant rebounds for three cybersecurity companies that have struggled this year as software stocks have broadly declined.
• Palo Alto Networks, CrowdStrike, and ZScaler are highlighted as the top contenders poised to benefit from the increasing security threats associated with AI advancements.

The software industry has faced a challenging start to the year, but some experts believe select cybersecurity stocks could see substantial growth despite recent setbacks. According to Wedbush analysts, the expanding adoption of AI is likely to introduce new security challenges, which in turn could boost demand for cybersecurity solutions. In a recent report, they identified three companies they expect to emerge as leaders in this environment.

Investor Perspective: Why It Matters

Wedbush contends that investors may be overlooking the growth potential within the cybersecurity sector as AI-related risks become more prevalent, suggesting that leading companies in this space have considerable upside.

CrowdStrike (CRWD) is described by Wedbush as the "gold standard" in cybersecurity, even after a recent decline in its share price. The stock has dropped about 13% so far this year, but Wedbush has set a price target of $600, implying nearly 50% growth from its recent value of around $408.

ZScaler (ZS) is also singled out as a top choice in the cybersecurity market, thanks to its robust product lineup and AI-driven strategy. Wedbush analysts project that ZScaler’s stock could approximately double to $350 over the next year.

Palo Alto Networks (PANW) completes Wedbush’s recommended trio. The company, which has expanded its portfolio through several recent acquisitions, is expected to benefit as businesses seek to streamline their cybersecurity vendors. Palo Alto Networks is set to announce earnings after today’s market close, and Wedbush’s $225 price target is about 37% higher than its current share price.

Additional updates are expected soon, with ZScaler scheduled to report earnings on February 26 and CrowdStrike set to release its quarterly results on March 3.

All three companies saw their stock prices fall on Tuesday amid a broader market downturn.