Sarah Travers
The digital landscape is evolving at a rapid pace, driven by advancements in technology and the increasing connectivity of our daily lives. Smartphones enable instant communication across the globe, remote work has become the norm for many businesses, and cloud services are integral to the operations of numerous major companies. While these developments bring significant benefits in terms of efficiency and connectivity, they also open the door to heightened cyberattack risks.
Cyberattacks pose severe consequences, including substantial financial costs and reputational damage. Companies spend vast sums recovering from breaches and bolstering their security measures, while the loss of customer confidence can have long-lasting impacts. This environment has made the cybersecurity industry indispensable, with enormous growth potential.
For investors looking to capitalize on this booming sector, three companies stand out as top contenders in July: Cisco Systems, Alphabet, and CrowdStrike. Each of these companies plays a pivotal role in fortifying digital defenses and is positioned to thrive in the face of escalating cyberthreats.
Cisco Systems: A Hardware-Based Approach to Cybersecurity
Cisco Systems offers a unique proposition in the cybersecurity landscape by focusing on critical hardware. While many cybersecurity firms are predominantly software-based, Cisco provides essential hardware solutions, including threat detection devices, secure access services, and network security appliances. These tools are crucial in defending against cyberthreats.
Although Cisco is transitioning towards a greater emphasis on software and subscription services, its hardware remains vital. This shift aims to address challenges such as declining hardware sales due to customers retaining existing equipment longer. In Cisco’s latest quarter, subscription revenue accounted for 54% of total revenue, reaching $6.9 billion, with annual recurring revenue (ARR) up 22% year over year.
A significant development for Cisco this year was its $28 billion acquisition of Splunk, a company specializing in data analytics and cybersecurity. This move is expected to enhance Cisco’s capabilities in protecting critical infrastructure and position it as a key player in the AI revolution.
Alphabet: Expanding Cybersecurity Capabilities
Alphabet, widely recognized for its Google search and advertising business, is also making significant strides in cybersecurity. Alphabet’s commitment to enhancing its cybersecurity offerings was underscored by its reported negotiations to acquire the cybersecurity startup Wiz for approximately $23 billion. Although Wiz ultimately rejected the offer, the move demonstrated Alphabet’s willingness to invest heavily in boosting its Google Cloud security services.
Despite lagging behind Amazon Web Services (AWS) and Microsoft Azure in the cloud computing market, Google Cloud has shown impressive growth, with revenue up 28% year over year in the last quarter. Currently holding an 11% market share, Alphabet aims to close the gap by prioritizing robust cybersecurity solutions. As Alphabet continues to enhance its cybersecurity capabilities, Google Cloud is set to become a more attractive option for businesses seeking comprehensive security.
CrowdStrike: Overcoming Challenges with Strong Prospects
CrowdStrike has faced significant scrutiny following a major IT outage that disrupted industries worldwide. The incident, attributed to a software update, caused the stock to plunge, losing about a quarter of its value in a few days. Despite this setback, CrowdStrike’s long-term prospects remain promising.
Before the outage, CrowdStrike’s stock had surged over 130% in the past year, reflecting investor confidence in its capabilities. The company provides cloud security to 62 Fortune 100 companies, showcasing its ability to attract and retain major enterprises. The recent incident did not stem from a successful cyberattack, reinforcing CrowdStrike’s effectiveness in cybersecurity.
At the end of the first quarter of its 2025 fiscal year, CrowdStrike reported that 65% of its customers used five or more of its security modules, with substantial growth in those using six, seven, and eight or more modules. Financially, the company posted $3.64 billion in ARR, up 33% year over year, and saw a 72% increase in operating income to $199 million.
CrowdStrike anticipates that the market for AI-native security platforms will expand from $100 billion this year to $225 billion by 2028. While the future remains uncertain, the growing market for cybersecurity positions CrowdStrike to capitalize on this expansion effectively.
Investing in Cybersecurity for a Safer Future
As the digital world becomes increasingly interconnected, the importance of robust cybersecurity measures cannot be overstated. Cisco Systems, Alphabet, and CrowdStrike are three companies at the forefront of this critical industry, each offering unique strengths and growth potential. For investors seeking opportunities in the cybersecurity sector, these stocks represent compelling options to consider in July.
