Missed the AI Rally? Jefferies Says CrowdStrike and These 3 Other Cybersecurity Stocks Could Be Next

Cybersecurity has never been more important for enterprises, yet cybersecurity stocks are still finding their footing as an asset class. 

While artificial intelligence (AI), software as a service (SaaS), and nearly every aspect of modern life now depend on secure digital infrastructure, the major cybersecurity ETFs have underperformed the broader tech sector over the past year. The Global X Cybersecurity ETF (BUG) is down 7.3% over 52 weeks, while the Vanguard Information Technology ETF (VGT) is up 21.75%.

That disconnect between necessity and performance creates opportunity, and Jefferies just laid out which names should lead the sector in 2026: CrowdStrike (CRWD), Palo Alto Networks (PANW), Zscaler (ZS), and AvePoint (AVPT).

Crowdstrike: Pole Position In Endpoint Security

Despite the July 2024 global IT outage that briefly tanked the stock, CrowdStrike has surged 30.5% over the last year, significantly outpacing the S&P 500 Index's ($SPX) 16.65% gain. 

Jefferies sees the company maintaining what it calls a "pole position" in endpoint spending, with annual recurring revenue (ARR) expected to grow 23% or more in fiscal 2027.

Third-quarter results back that confidence as CrowdStrike posted $1.23 billion in revenue, up 22% year-over-year, while ARR climbed to $4.92 billion with a record $265.3 million in net new ARR. The company's cloud-native Falcon platform continues to win enterprise customers, and management raised full-year revenue guidance to $4.8 billion with adjusted EPS around $3.70. 

It’s worth noting that Insiders have been selling, including CEO George Kurtz, who offloaded $8.4 million worth of shares in late December. 

But Wall Street's consensus "Moderate Buy" rating and average price target of $559.57 suggest the market has looked past that noise, or has already priced it in.

Palo Alto: Building The Most Comprehensive Platform

Jefferies calls Palo Alto Networks the company positioned to become "the most comprehensive cybersecurity platform in 2026" following its planned acquisitions of Cyberark and Chronosphere. The firm generated $2.47 billion in revenue during its most recent quarter, up 15.7% year-over-year, and CEO Nikesh Arora highlighted "excellent results across all metrics" and significant platformization wins.

What makes Palo Alto particularly attractive is its 13% return on equity coupled with 61% net income growth over the past five years, well above the industry average of 25%. 

The company reinvests all profits into the business rather than paying dividends, which has funded aggressive M&A and product development. Analysts remain constructive despite recent share price weakness, viewing the pullback as a buying opportunity ahead of the integrations that should expand Palo Alto's addressable market significantly.

Zscaler: Cloud Migration Tailwind

Zscaler earned Jefferies' nod as the "best positioned" player in the secure-access-service edge space, and the numbers support that view. The company posted $788.1 million in quarterly revenue, up 25.5% year-over-year—the fastest growth rate among its cybersecurity peers—while delivering strong billings and raising full-year earnings per share (EPS) guidance.

As enterprises continue migrating to the cloud, Zscaler's zero-trust architecture becomes increasingly essential, replacing legacy VPNs and firewalls with cloud-native security that follows users and data wherever they go.

Along with the bullish nod from Jefferies, Mizuho recently upgraded the stock to “Outperform,” noting that recent weakness has created valuation support despite near-term growth questions. The firm sees Zscaler "very well-positioned within SASE/Zero Trust" for the long haul.

AvePoint: Enterprise Data Management Consolidation

AvePoint is the smallest name on Jefferies' list, but potentially the most interesting as a consolidation play in data management spending. The company provides SaaS-based data protection and governance for Microsoft 365, Salesforce, and Google Workspace, positioning it to benefit as customers prepare their data estates for AI workloads.

Anchor @ 65, a concentrated fund, recently increased its AvePoint position to 19.9 million shares worth $298.86 million, representing nearly 62% of the fund's assets. 

That vote of confidence comes as AvePoint turned profitable in the most recent fiscal year while trading at just 7 times sales. That’s a reasonable multiple if the company can leverage its Microsoft 365 integration to capture growing enterprise demand for cloud data governance.

What 2026 Holds for Cybersecurity

Cybersecurity spending isn't going away, but 2026 will test which platforms can actually deliver on their promises. The companies that nail product-market fit — those that prove they can cross-sell, expand margins, and become indispensable — could join Palo Alto and CrowdStrike as industry leaders. 

Even CrowdStrike's past outage, which cost the company millions in goodwill and stock price, hasn't dimmed long-term enthusiasm.

Investors seem more than willing to bet on stocks that can make both their portfolios and online experiences safer, and Jefferies' picks suggest the path forward runs through comprehensive platforms, zero-trust architecture, and AI-ready data management.