Over the past year, many investors have shied away from cybersecurity stocks as they tried to assess how artificial intelligence will impact the industry. Evaluating companies and their addressable markets is a smart strategy, but with multiple cybersecurity names selling off sharply recently, some investors have shifted from cautious analysis into full-blown panic mode.
That creates a buying opportunity for long-term investors. With the sell button getting pressed a bit too aggressively, here are two cybersecurity leaders that now look worth snatching up.
Palo Alto Networks (PANW) is an established cybersecurity player that has made bold moves to fortify its market position, including its $25 billion acquisition of CyberArk last year to gain best-in-class identity and access management capabilities. Now, Palo Alto is also leaning into AI for growth.
CEO Nikesh Arora said last month that the company is seeing “continued strength in platformizations, a trend that is accelerating due to AI — customers are keen to both modernize and normalize their cybersecurity stack, aligning them to our approach.” Arora added that as more customers adopt AI security solutions, the company expects to benefit from a “long-term trend.”
Palo Alto’s Prisma AIRS artificial intelligence security platform has quickly become a standout tool in its arsenal, with the number of customers using the platform tripling in just one quarter. The company’s fiscal second-quarter results underscored just how strong demand is for its offerings: Sales rose 15% year over year to $2.6 billion, while diluted earnings per share jumped nearly 61% to $0.61.
Management expects continued momentum, guiding for full-year 2026 revenue of approximately $11.3 billion — a nearly 23% increase from last year. What’s more, Palo Alto expects to sustain strong profitability, with a non-GAAP operating margin of around 29% for the year.
Investor uncertainty over AI’s impact on cybersecurity has helped push Palo Alto’s shares down 20% over the past 12 months. Given that pullback — and the company’s strong positioning and high profitability — the stock looks like a compelling buy today.
Microsoft (MSFT) doesn’t break out cybersecurity revenue separately, but analysts estimate its security business will generate roughly $37 billion in 2025, with the potential to reach $50 billion annually by 2030. The company recently disclosed it now serves 1.6 million security customers globally.
Microsoft is exceptionally well-positioned to benefit from an increasingly complex AI threat landscape, largely because its security business is tightly integrated with its cloud computing arm. Azure ranks as the No. 2 cloud platform behind Amazon, commanding 21% market share, and it continues to gain ground. As the AI cloud market expands to nearly $2 trillion by 2030, Microsoft is likely to add even more cybersecurity customers — many of whom will become locked into its broader cloud ecosystem.
Moreover, as an AI leader with its Copilot assistant, Microsoft can embed artificial intelligence into its security software in ways most competitors can only dream of. The company recently introduced Agent 365, an AI agent that lets enterprise customers govern their existing security services using the same controls already in place for Microsoft 365 and Azure. One customer used the agent to cut cybersecurity threat triage time by 75%.
For investors, the valuation adds to the appeal: Microsoft currently trades at just 25 times forward earnings — far below the tech sector’s average P/E of 39. Shares have been flat over the past year, but with its leadership in security, combined with AI and cloud tailwinds, the stock looks like a solid long-term pick.
