2 Cybersecurity Stocks That Will Rule 2027
Key Points
CrowdStrike's stock has risen by more than 100% in 2026.
Fortinet's revenue hit $2 billion in the second quarter.
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Recent headlines about the dangers posed by advancing artificial intelligence systems have stoked fear among individuals and businesses alike. The threat that bad actors could use such tools to hack corporate systems is a growing concern for management teams in most, if not all, industries.
This is leading to a surge in spending on cybersecurity protection, and two companies poised to capture much of that growing market in the coming years are CrowdStrike (NASDAQ: CRWD) and Fortinet (NASDAQ: FTNT).
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CrowdStrike's growth has been tremendous. In its latest fiscal quarter, revenue grew 26% year over year to $1.47 billion. Free cash flow also hit $377 million. The company has plenty of cash to invest in itself and improve its ability to keep pace with AI-related threats.
Fortinet is the steadier option, but it still has good growth prospects. The company's management has cited rising demand due to enterprise AI adoption and the need for industrial system protection. In the second quarter, Fortinet's billings grew 33% year over year, and total revenue exceeded $2 billion.
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Both stocks trade at hefty premiums. CrowdStrike's forward P/E is above 180, and Fortinet's, while more reasonable, is still around 40. For investors who can stomach a substantial dose of volatility, the long-term trajectory for both companies looks good, considering the ever-evolving threats in the digital world.
Rising AI adoption only increases the need for effective cybersecurity solutions. The threats companies face are becoming more sophisticated, and CrowdStrike and Fortinet are pure-play businesses well equipped to secure their clients' data and gain market share, each in its own way.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Fortinet. The Motley Fool has a disclosure policy.
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