The Great Rotation Hit Cybersecurity Stocks Hard. Smart Investors Are Buying the Dip.

The arrival of artificial intelligence (AI) supercharged technology stocks in recent years, but the situation changed in 2026. Wall Street's "great rotation" away from tech stocks caused a sharp drop in the share prices of cybersecurity companies.

Now, investors have an opportunity to scoop up stocks in the sector at attractive valuations. Buying the dip makes sense because cybersecurity is a necessity to safely navigate online. That's why the industry is forecast to grow from $248 billion in 2026 to $699 billion by 2034.

In fact, Palo Alto Networks (NASDAQ: PANW) CEO Nikesh Arora took advantage of the situation to buy company shares worth about $10 million in March. This was his first buy since 2019. Here's a look at this situation and why it makes sense to buy cybersecurity stocks now.

Image source: Getty Images.

Cybersecurity remains a resilient sector

In early 2026, Wall Street believed that artificial intelligence (AI) could usurp cybersecurity companies' business. But several factors make that possibility unlikely.

The stakes are too high for organizations to entrust IT security to unproven AI substitutes from the likes of Anthropic, despite its release of an AI capable of finding software vulnerabilities. Look no further than CrowdStrike's technical glitch in 2024 for an example of cybersecurity's central role in today's digital world. The company's mistake caused global disruption to airlines, banks, and hospitals.

Rather than lose to AI, the more likely scenario is for cybersecurity enterprises to partner with the companies building artificial intelligence. Both Palo Alto Networks and SentinelOne (NYSE: S) are collaborating with Alphabet-owned Google Cloud to ensure AI infrastructure is protected.

Moreover, several IT security providers have already woven artificial intelligence into their platforms. A prime example is SentinelOne, an early adopter of the tech, having built AI into the core of its systems from inception.

Cybersecurity stocks to consider buying

Sales are going strong for several cybersecurity companies, indicating demand remains robust for their services. In Palo Alto Networks' fiscal second quarter, ended Jan. 31, revenue rose a strong 15% year over year to $2.6 billion.

SentinelOne's sales for its fiscal Q4, ended Jan. 31, totaled $271.2 million. This sum represented 20% growth over the prior year, allowing the company to surpass $1 billion in full-year revenue for the first time.

Along with Palo Alto Networks and SentinelOne, zero-trust cloud specialist Zscaler (NASDAQ: ZS) is another top cybersecurity company that experienced substantial share price drops this year. Zscaler boasted sales growth of 26% year over year to $815.8 million in its fiscal Q2, ended Jan. 31.

Revenue for Palo Alto Networks, SentinelOne, and Zscaler reveals their businesses are booming. Now, contrast this with their share price valuations, as shown by the price-to-sales ratio.

Data by YCharts.

The chart shows that the stocks of all three companies are trading at sales multiples hovering near multiyear lows. SentinelOne and Zscaler stand out for how far their price-to-sales ratios have fallen, suggesting their shares are particularly cheap.

With the cybersecurity industry projected to expand and many companies in the sector trading at low valuations, there may be no better time than now to scoop up shares.

Robert Izquierdo has positions in Alphabet, CrowdStrike, Palo Alto Networks, and SentinelOne. The Motley Fool has positions in and recommends Alphabet, CrowdStrike, SentinelOne, and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.