10 Best Performing Cybersecurity Stocks in 2024

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In this article, we will take a look at the 10 Best Performing Cybersecurity Stocks in 2024.

Data Breaches to Disruptions

The technology sector has expanded rapidly in recent years, creating an increasingly interconnected digital world. Cybersecurity, a relatively new field, has become critical as the volume of sensitive data stored online has surged. This growth has unfortunately provided more opportunities for cybercriminals to commit financial theft, steal confidential information, and disrupt vital infrastructure. In 2023 alone, data breaches affected over 349 million individuals, highlighting a troubling trend. The Consumer Sentinel Network received a surge in reports, with fraud making up over 2.6 million cases and identity theft surpassing one million. The scale of these threats is substantial; according to McKinsey, damages from cyberattacks could reach approximately $10.5 trillion annually by 2025—a 300% increase from 2015 levels.

A Microsoft Security survey reveals that small and mid-sized businesses (SMBs) face added challenges due to limited resources and expertise in implementing and managing advanced security solutions to detect, prevent, or mitigate cyberattacks. Fewer than one-third of respondents indicated that their SMBs handle security internally; the majority rely on consultants, managed service providers, or cyber insurance guidelines for choosing security tools.

AI Meets Cybercrime

As AI technology advances, data privacy and risk management concerns are escalating for individuals and businesses alike. Although regulators are exploring strategies to foster AI innovation while minimizing potential negative impacts on society, the United States still lacks comprehensive federal legislation addressing AI.

AI is transforming the cybersecurity landscape from both the threat and defense perspectives, creating a long-term growth path. “Cyber threats continue to evolve, and as digital transformation accelerates, so does the potential for cyberattacks,” noted Christopher Gilchrist, principal analyst at Forrester. Earlier this year, The World Economic Forum predicted that AI could push cyber incidents and data breaches to hit record levels in 2024, following a 72% year-over-year rise in breaches in the past year.

Nonetheless, the technology holds transformative potential for security. Palo Alto Networks remarked that 2024 “will be a phenomenal year in the utilization of AI in cybersecurity,” yet predicts even greater advances in the future. For investors, this growth represents an intriguing opportunity. According to Acumen research, the global market for AI-driven cybersecurity products was valued at around $15 billion in 2021, with projections to reach approximately $135 billion by 2030. AI’s ability to analyze vast data sets and detect patterns makes it especially effective for tasks like penetration testing, where systems are deliberately probed for vulnerabilities. By deploying AI tools to assess their own technology, organizations can identify weaknesses proactively—closing gaps before hackers have the chance to exploit them.

The constant evolution of external threats means that cybersecurity must continually adapt to stay ahead of emerging risks, with the top players racing to deliver innovative solutions to remain competitive. Now, let’s take a look at the best-performing cybersecurity stocks in 2024.

10 Best Performing Cybersecurity Stocks in 2024

[Shutterstock: 380107090, scyther5]

Our Methodology

To compile our list of the best-performing cybersecurity stocks this year, we reviewed the holdings of various cybersecurity ETFs and sorted them by year-to-date performance, as of November 8, in ascending order. Additionally, we included hedge fund sentiment on each stock to provide further context and insight into each company’s outlook.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

10. Cloudflare, Inc. (NYSE:NET)

Year-to-Date Performance as of November 8: 15.00%

Number of Hedge Fund Holders: 39 

Cloudflare, Inc. (NYSE:NET) is a cloud-based cybersecurity and website management company that also offers routing and developer security services. Recently, the firm has made strides in the AI space by acquiring GPUs to enable customers to deploy AI models, including generative AI at the edge. With the current industry-wide GPU shortage, this early investment positions Cloudflare to potentially benefit from additional revenue streams.

Back in May of this year, Cloudflare, Inc. (NYSE:NET) expanded its Zero Trust offerings by acquiring BastionZero, a company specializing in secure infrastructure access. This acquisition enhances Cloudflare One’s capabilities, offering a VPN replacement that secures both applications and infrastructure resources.

On October 2, Citi maintained a Neutral rating for Cloudflare, Inc. (NYSE:NET) with a $90 price target, following the company’s 14th annual Birthday Week, where the company introduced several updates focused on cybersecurity and Secure Access Service Edge (SASE) developments. While Citi noted positive momentum in Cloudflare’s path toward $5 billion in revenue—citing improved go-to-market strategies and successful SASE integration—the firm also pointed out that the company’s current valuation reflects market optimism. Citi’s analysis also highlighted Cloudflare’s advancements in generative AI and its partnership with the tech giant Apple, particularly in expanding developer tools.

Baron Fifth Avenue Growth Fund stated the following regarding Cloudflare, Inc. (NYSE:NET) in its Q2 2024 investor letter:

“Cloudflare, Inc. (NYSE:NET) provides content delivery network services, cloud cybersecurity, denial-of-service mitigation, Domain Name Service, and ICANN-accredited domain registration services. Shares fell 14.4% during the quarter on remarks from the CEO about worsening macro conditions, citing the negative impact of geopolitical uncertainties on customer buying behavior. On the positive side, the company posted strong quarterly results with revenue growth of 30% year-over-year, showing evidence that the changes to the company’s go-to-market strategy were resonating with solid growth across its large customer cohorts (revenues from customers spending over $100,000 represented 67% of the total, up from 62% in the first quarter of 2023), double-digit improvement in sales productivity, and new pipeline attainment ahead of plan. Cloudflare reiterated revenue guidance for the year on resilience in cybersecurity spend. While we fine-tuned our model on the back of the company’s increased macro headwind commentary, pushing out revenue reacceleration estimates from the second quarter of 2024 to the first quarter of 2025, this is still ahead of guidance. We retain conviction in the long-term thesis: a strong founder-led business with a unique global network and significant pricing advantages powering a disruptive multi-product growth story with improving margins. We therefore remain shareholders.”

9. Varonis Systems Inc. (NASDAQ:VRNS)

Year-to-Date Performance as of November 8: 17.65%

Number of Hedge Fund Holders: 36

Varonis Systems Inc. (NASDAQ:VRNS), based in New York City with R&D operations in Herzliya, Israel, specializes in cybersecurity software. Its platform enables organizations to manage and secure unstructured data, leveraging User Behavior Analytics to detect and counter potential cyber threats.

On October 30, DA Davidson raised its price target for Varonis Systems Inc. (NASDAQ:VRNS) from $47 to $50, while maintaining a Neutral rating. This update followed Varonis’ earnings report, which exceeded market expectations, with Net New Annual Recurring Revenue (NNARR) surpassing estimates by about $5 million, while the Annual Recurring Revenue (ARR) grew at a steady 18% year-over-year, or 13% when excluding SaaS conversions. The company’s strong performance was driven by factors like customer conversions, new acquisitions, and growth in its Managed Detection and Response (MDDR) services, along with initial contributions from its GenAI and Copilot technologies.

Looking forward, Varonis Systems Inc. (NASDAQ:VRNS) has adjusted its Fiscal Year 2025 ARR growth projection to 17-18% year-over-year, slightly under buy-side expectations, which were around 19-20%.

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