We recently compiled a list of the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Gen Digital Inc. (NASDAQ:GEN) stands against the other undervalued cybersecurity stocks.
With businesses facing a significantly complex cyber threat landscape, it is of utmost importance to stay ahead of trends in cybersecurity. Industry experts believe that, in 2025, the integration of AI in threat detection and acceleration in post-quantum encryption should define the landscape of the broader cybersecurity industry. Splashtop reported that the transition to a Zero-Trust framework demonstrates a significant shift in cybersecurity, emphasizing continuous verification and minimal access to enhance overall network security.
Global X Cybersecurity ETF saw an increase of more than 20% over the past year. What has led to this rally? Given the recent adoption of AI technology, market experts believe that the need for cybersecurity is significantly important. With several companies integrating GenAI into their operations, there has been a significant increase in cyberattacks. This led to increased demand for product offerings of cybersecurity companies.
Cybersecurity Industry- The Road Ahead
As per Fortune Business Insights, the global cybersecurity market size was pegged at US$172.24 billion in 2023. This market should grow from USD 193.73 billion in 2024 to USD 562.72 billion by 2032, demonstrating a CAGR of 14.3%. Furthermore, the US cyber security market should see strong growth, touching an estimated value of US$166.73 billion in 2032. This should stem from an increased number of e-commerce platforms. The strong adoption of enterprise security solutions in manufacturing, BFSI, and healthcare should fuel market growth up to 2032.
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Prevention of Cyberattacks
As per EIN Presswire, the quicker expansion of the Internet of Things (IoT) offers a significant opportunity for the broader cybersecurity market. As IoT devices—which range from smart home appliances to industrial sensors— become critical to business operations, there seems to be an increased requirement for effective cybersecurity measures. Several devices often lack strong security protocols. This leads to hacking, unauthorized access, and exploitation.
EIN Presswire added that, amidst these challenges, the cybersecurity industry has a unique opportunity to develop specialized solutions established to secure the IoT ecosystem effectively. This might consist of implementing advanced encryption protocols to protect data transmission, and developing device authentication mechanisms so that only authorized devices can connect to the network. Also, intrusion detection systems can be deployed tailored to monitor and protect against threats related to interconnected devices.
NGFWs (Next Generation Firewalls) protect against evolving practices that use AI to bypass traditional defences, as per Juniper Research. It added that the network layer is the most critical element of IoT networks to protect, with more than 45% of global cybersecurity spending inclined towards protecting the network layer in 2025.
Our Methodology
To list the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds, we sifted through numerous online rankings and combed through cybersecurity-focused ETFs, such as First Trust NASDAQ Cybersecurity ETF and Amplify Cybersecurity ETF. After getting an initial list of 25-30 stocks, we extracted the ones trading lower than the forward P/E of ~20.0x, as of November 20. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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).
A close up of a computer monitor with a green padlock icon to symbolize the company’s cyber safety solutions.
Gen Digital Inc. (NASDAQ:GEN)
Forward P/E as of November 20: ~13.4x
Number of Hedge Fund Holders: 27
Gen Digital Inc. (NASDAQ:GEN) is engaged in providing consumer cybersecurity solutions. It offers solutions that enable consumers to protect their devices, online privacy, identity, and home networks.
Wall Street analysts are optimistic about Gen Digital Inc. (NASDAQ:GEN)’s growth potential, which stems from the favorable market environment and increased awareness of cybersecurity needs. Furthermore, a recent data breach at NPD increased consumer interest in identity protection services. This added momentum to the Gen Digital Inc. (NASDAQ:GEN)’s offerings.
In Q2 2024, the company expanded its customer base for the 5th consecutive quarter, rising to 39.7 million, up 389,000 sequentially and up more than 1.1 million YoY. This growth was mainly driven by international growth and increased demand for identity services.
Gen Digital Inc. (NASDAQ:GEN)’s successful cross-selling strategies, along with the development of NextGen’s product portfolio, should continue to contribute to its strong performance. Collaborating with banks, credit card companies, and other financial services providers is expected to allow Gen Digital Inc. (NASDAQ:GEN) to provide identity protection as a value-added service to a broader customer base. This might include real-time monitoring of financial transactions and credit reports.
Making investments in cutting-edge AI technologies should enhance the capabilities of Gen Digital Inc. (NASDAQ:GEN)’s identity protection services, improving threat detection and offering more personalized protection. This might set the company’s offerings apart in a competitive market.
As per Wall Street analysts, the shares of the company have an average price target of $31.83.
Overall GEN ranks 6th on our list of the most undervalued cybersecurity stocks to buy according to hedge funds. While we acknowledge the potential of GEN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than GEN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.