As artificial intelligence expands corporate attack surfaces, enterprise security has shifted from a discretionary purchase to an essential operating expense. This transformation has made cybersecurity one of the few software sectors still commanding premium valuations, even as broader tech multiples compress.
Josh Brown, CEO of Ritholtz Wealth Management, believes the current expansion cycle still offers substantial upside for select industry leaders. His analysis points to CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT) as primary vehicles to capture this ongoing re-rating.
CrowdStrike: Momentum and Record ARR
CrowdStrike's stock has more than doubled year-to-date, recovering from a 25% February dip tied to AI-disruption fears. After a 4-for-1 split on July 1, the shares gained 14% on September 14 amid a sector-wide rotation. Trading near $250, the stock sits above both its 50-day and 200-day moving averages, with a relative strength index in the early 60s indicating positive momentum and support near $220.
The company's latest quarterly results underscore its strength: revenue rose 26% to $1.47 billion, net-new annual recurring revenue hit a record $333 million (up 51% year over year), and Falcon Flex ARR jumped 101% to $2.29 billion. Full-year ARR guidance was raised to $1.35 billion, alongside a free cash flow margin above 30%.
Backed by an Nvidia-partnered SafeMind initiative and a $20 billion fiscal 2035 ARR target, Brown sees long-term strength despite elevated valuation risk.
Palo Alto Networks: Platformization Drives Deals
Palo Alto Networks shares have consolidated after rallying from $184 in May to nearly $400 by late summer. At $374, the stock is in a short-term downtrend of lower highs, with its 200-day moving average at $241 too far below to serve as a tactical marker. An RSI of 53 suggests neutral drift, but buyers have repeatedly defended support between $320 and $330.
Fundamentally, PANW's platformization strategy continues to drive enterprise deal flow as large buyers consolidate their security vendor stacks. Brown advises that pullbacks in Palo Alto Networks are worth buying for long-term holders, though he warns that weaker technical charts call for discipline until overhead resistance clears near $400. The company's latest reported quarter came in well above Street estimates, and it currently holds an Overweight rating among Wall Street firms.
Fortinet: Breakout with a Risk Warning
Fortinet escaped a year-long stagnant trend in May, gapping from $90 to $108 post-earnings to launch a sequence of higher highs and higher lows, with the rising 50-day moving average acting as a floor on pullbacks. Trading near $174, the stock has consolidated in the $150–$175 band since July. The 50-day sits at $160 and rising, above the 200-day at roughly $114, while an RSI of 58 reflects balanced, non-overbought momentum. Key support holds at $150.
Fundamental demand is sustained by corporate firewall upgrades and network architecture refresh cycles. Brown remains bullish on the breakout but cautions that Fortinet's history of sharp post-earnings drawdowns requires a tighter risk leash than CrowdStrike.
Overall, these three cybersecurity names offer distinct technical entries backed by enterprise platform consolidation and accelerating balance-sheet metrics. While valuation risks persist, the mission-critical nature of their products positions them well for continued growth in 2026.
This article is for informational purposes only and does not constitute financial advice.
