We recently compiled a list of the 11 Best Cybersecurity Stocks to Buy According to Wall Street Analysts. In this article, we are going to take a look at where Radware Ltd. (NASDAQ:RDWR) stands against the other best cybersecurity stocks to buy.
The widespread growth of internet usage has seamlessly integrated connectivity into the daily lives of individuals and businesses. This expansion has also created greater opportunities for cybercriminals to engage in financial theft, compromise sensitive information, and disrupt critical infrastructure. Despite progress in reducing response times to cyber risks, it still takes organizations an average of 73 days to contain an incident. As organizations navigate an increasingly complex cyber threat landscape, staying ahead of emerging cybersecurity trends has become crucial. Amid the rise in both the volume and sophistication of cyberattacks, global spending on cybersecurity products and services reached $200 billion in 2024, a sharp increase from $140 billion in 2020, according to McKinsey. Additionally, the cybersecurity market is projected to grow at an annual rate of 12.4% between 2024 and 2027, exceeding historical growth levels as organizations intensify efforts to counter evolving threats.
The rise of artificial intelligence also presents a dual opportunity for cybersecurity prospects: securing AI systems and leveraging AI to bolster security capabilities. These technologies enhance threat detection, automate responses, and improve predictive analytics, allowing for more proactive and efficient defenses against increasingly sophisticated attacks. According to McKinsey, AI is broadening the scope of what is already a $2 trillion market opportunity for cybersecurity providers. The firm further states that securing AI has emerged as a distinct cybersecurity market segment, projected to grow from $122 million today to $255 million by 2027. Additionally, as more organizations shift workloads from public cloud environments to private clouds, they face new expenses, further increasing the capturable value for cybersecurity vendors.
On the other hand, as AI technology advances, concerns around data privacy and risk management are escalating for individuals and businesses alike. The World Economic Forum projected earlier this year that AI advancements could drive cyber incidents and data breaches to unprecedented levels in 2024, following a staggering 72% increase in breaches over the past year.
Cybersecurity Regulations and Policies
President-elect Donald Trump’s return, coupled with his commitment to a more inward-focused foreign policy, is expected to bring new cyber threats, reduced regulations across most industrial sectors, and the possibility of business-friendly federal privacy legislation. However, the overall regulatory landscape will likely shift toward less emphasis on compliance and greater focus on safeguarding critical infrastructure and technology firms, according to Michael Bahar, co-lead of global cybersecurity and data privacy at Eversheds Sutherland.
“We are going to see — at the federal level — a deprioritization of cybersecurity regulations and cybersecurity enforcement. One really important exception is where cybersecurity intersects with trade policy and national security and technology. That’s actually where you’re going to see an increase of enforcement and at least a continuation of the regulatory environment.”
Experts anticipate that cyber threats could evolve in response to shifts in foreign policy under the new administration. China, in particular, has emerged as a significant concern due to its cyber activities in the Asia-Pacific region, its opposition to U.S. support for Taiwanese democracy, and its defiance of international opposition to its expansive claims in the South China Sea.
A secure data center showing the cyber security measures taken to protect company operations.
Our Methodology
To make our list of top cybersecurity stocks to buy according to Wall Street analysts, we reviewed the holdings of the Global X Cybersecurity ETF and selected stocks based on their upside potential, as of December 10. These stocks are ranked according to their average upside potential, from lowest to highest, based on price targets. Additionally, we have included the number of hedge funds with stakes in these stocks, using Insider Monkey’s hedge fund data for the third quarter.
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).
Radware Ltd. (NASDAQ:RDWR)
Average Analyst Upside: 26.74%
Number of Hedge Fund Holders: 17
Radware Ltd. (NASDAQ:RDWR), an Israeli systems software company, specializes in cybersecurity and application delivery solutions for cloud, on-premise, and software-defined data centers across the globe.
On November 19, Radware Ltd. (NASDAQ:RDWR) introduced AI SOC Xpert, a cloud security service leveraging artificial intelligence to reduce incident resolution times for DDoS and application security threats by up to 95%. The service automates key security operations, including attack detection, root cause analysis, and remediation, optimizing SOC efficiency.
Radware Ltd. (NASDAQ:RDWR) delivered strong results in Q3 2024, with revenue rising 13% year-over-year to $69.5 million. Non-GAAP earnings per share surged to $0.23, compared to $0.07 in the same quarter last year. This growth was largely attributed to the robust performance of its cloud security business, as cloud Annual Recurring Revenue climbed 15% to $71.6 million.
Looking ahead, the cybersecurity company forecasts Q4 2024 revenue between $71 million and $72 million and expects non-GAAP diluted EPS in the range of $0.23 to $0.24. Radware Ltd. (NASDAQ:RDWR) also plans to modestly increase operating expenses, primarily focusing on sales and marketing initiatives to support its growth trajectory.
Overall, RDWR ranks 2nd on our list of best cybersecurity stocks to buy according to Wall Street analysts. While we acknowledge the potential of RDWR, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RDWR 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.