Got $5,000? These 2 AI Security Growth Stocks Wall Street Says Could Surge 58% or More

In February, JPMorgan Private Bank released a report that projected that a surge of investment into cybersecurity was on the way.

The report forecast that $240 billion will be spent on cybersecurity in 2026, and that spending in that category would grow at an 11% annualized clip to $320 billion by 2029. Moreover, it predicted that spending on AI-related cybersecurity measures would grow three to four times faster.

One big factor driving those rising outlays, according to JPMorgan Private Bank, a subsidiary of JPMorgan Chase, will be the need to protect the AI infrastructure that enterprises have invested in so heavily. But AI-related security measures are also needed to better defend against more sophisticated AI attacks.

In addition, wars and rising geopolitical tensions have thrown a brighter spotlight on the need for more advanced cybersecurity.

Image source: Getty Images.

In March, President Donald Trump issued an executive order directing the government to find better ways to combat cybercrime, which could lead to more opportunities for cybersecurity companies.

These are some of the reasons that cybersecurity stocks are coming back into favor among investors and Wall Street. Two that analysts seem particularly bullish on are Zscaler (NASDAQ: ZS) and Atlassian (NASDAQ: TEAM).

1. Zscaler

Many cybersecurity companies stake out niches within the industry, and often partner with peers in adjoining niches rather than competing with them. Zscaler's specialty is securing the connection or "pipe" between users and the internet. It essentially replaces the need for a VPN or firewall. Companies like CrowdStrike (NASDAQ: CRWD), by contrast, protect the endpoint, or the computer or server.

Zscaler stock has fallen by 40% year to date, dragged down by some of the same factors that have impacted other cybersecurity stocks. Those factors include a high valuation and fears that its business model is at risk from AI disruption from companies like OpenAI and Anthropic, which released its Claude Code Security program in February.

Some investors fear that AI models could prove a cheaper alternative to the software offerings of established cybersecurity providers. However, many analysts think the threat is being overblown, as the AI models aren't sophisticated enough to handle the complexities that pure-play providers can. In fact, the rising use of agentic AI will only increase the need for more advanced and comprehensive services like those that Zscaler offers.

Zscaler has enjoyed strong revenue and annual recurring revenue (ARR) growth, and in its fiscal 2026 second-quarter report (released Feb. 26), it raised its full-year guidance for both revenue and ARR growth to 24%. However, the company is still not profitable on a GAAP basis, and its valuation of 30 times expected forward earnings is still fairly high. However, it is down from a high of 52 in January, and the loftiness of that valuation may have contributed to its subsequent stock price decline.

But Wall Street is very bullish on Zscaler. Some 86% of the 49 analysts who cover it rate it as a buy, and their median price target of $220 per share would indicate a return of 58% over the next 12 months.

2. Atlassian

Atlassian is not a cybersecurity specialist like Zscaler. It makes productivity software that helps teams and workers collaborate. However, its offerings include some key security features to safeguard its users' systems from hackers and unauthorized access.

Atlassian stock, too, is down big this year, off about 58% year to date as of April 1, as investors worry about the potential for AI to disrupt its business model.

But the company delivered strong revenue growth in the last quarter and management is guiding for 22% revenue growth this fiscal year, including 24% from cloud revenue. That would be an acceleration from 20% revenue growth in fiscal 2025.

Atlassian is also not profitable on a GAAP basis, but is moving toward it with a cost-cutting and restructuring initiative that included laying off 10% of its employees last month. The restructuring costs added to its expenses in recent quarters, but should move the company toward profitability.

Atlassian is a fair bit cheaper than Zscaler, with a forward P/E ratio of 12. Wall Street analysts are also more bullish on Atlassian. Roughly 79% of analysts covering the stock rate it as a buy, with a median price target of $150 per share. That would suggest 120% upside.

Of the two, Atlassian is seen as having higher upside and a lower valuation as it moves toward profitability. But given some of the tailwinds for cybersecurity stocks, both are worth considering today.

JPMorgan Chase is an advertising partner of Motley Fool Money. Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Atlassian, CrowdStrike, JPMorgan Chase, and Zscaler. The Motley Fool has a disclosure policy.