Cybersecurity stocks ranked among the hottest names on the stock market for years as these companies have been riding a wave of cyber threats and have easily acquired clients. Moreover, AI made them even hotter. These companies delivered jaw-dropping growth as businesses scrambled to protect their data from extremely sophisticated attacks.
Even in this environment, many are still posting very impressive revenue figures. Their services remain in high demand because cybercrime shows no signs of slowing down. Yet despite this strength, their stock prices have taken a nosedive this year. Unfortunately, there’s a lot of pessimism surrounding AI and connected themes like cybersecurity.
Wall Street is pulling back on these names, and the shift has dragged down some stocks that were market darlings just a few months before. It’s a good idea to look into the cybersecurity stocks that have been sold off the most, as there are likely buying opportunities here.
An engineer typing on a computer.
Methodology
For this article, I screened the worst-performing cybersecurity stocks year-to-date.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
15. Rockwell Automation Inc (NYSE:ROK)
Number of Hedge Fund Holders In Q4 2024: 39
Rockwell Automation Inc (NYSE:ROK) is an industrial automation company and it also has industrial cybersecurity operations.
The stock is down significantly so far in 2025 due to the company reporting disappointing financial results for the first quarter of fiscal 2025. Sales declined by 8.4% year-over-year to $1.88 billion, with organic sales down 7.6%.
Adjusted EPS fell 10% to $1.83 due to lower sales volumes and macro headwinds.
Analysts have revised price targets downward due to weaker-than-expected revenue growth and declining margins.
The consensus price target of $307.42 implies 14.26% upside.
ROK stock is down 5.36% year-to-date.
14. Varonis Systems Inc (NASDAQ:VRNS)
Number of Hedge Fund Holders In Q4 2024: 38
Varonis Systems Inc (NASDAQ:VRNS) provides software solutions for data security.
The stock is down significantly so far in 2025, as Varonis reported a quarterly loss of $0.10 per share. It missed the consensus estimate of $0.14 by $0.24.
Moreover, analysts revised their forecasts for 2025 and projected increased losses of $0.89 per share versus prior expectations of $0.74 per share.
It reported annual recurring revenue growth but fell short of revenue expectations due to the company facing challenges in transitioning to a SaaS model.
The consensus price target of $59.38 implies 42.42% upside.
VRNS stock is down 6.17% year-to-date.
13. Tenable Holdings Inc (NASDAQ:TENB)
Number of Hedge Fund Holders In Q4 2024: 38
Tenable Holdings Inc (NASDAQ:TENB) is a cybersecurity company that provides cyber exposure management.
The stock is down significantly so far in 2025 due to Tenable reporting mixed Q4 2024 results with revenue of $235.7 million (up 11% year-over-year) and better-than-expected earnings per share. However, the company issued weaker-than-expected revenue and EPS guidance for Q1 2025.
The sudden death of CEO Amit Yoran in January 2025 after a battle with cancer also created leadership uncertainty.
Interim Co-CEOs Steve Vintz and Mark Thurmond were appointed, but investors reacted negatively to the lack of permanent leadership.
The consensus price target of $49.2 implies 35.09% upside.
TENB stock is down 7.52% year-to-date.
12. AvePoint Inc (NASDAQ:AVPT)
Number of Hedge Fund Holders In Q4 2024: 40
AvePoint Inc (NASDAQ:AVPT) is a cloud-native data management software platform that includes cybersecurity solutions.
The stock is down significantly so far in 2025 as AvePoint reported a significant earnings miss for Q4 2024, with an EPS of -$0.09 compared to the analyst estimate of $0.05.
Despite revenue exceeding expectations at $89.18 million (20% year-over-year growth), the stock dropped due to profitability concerns.
SaaS revenue grew strongly by 43%, but the market reacted negatively to the earnings miss.
The consensus price target of $15.75 implies 4.58% upside.
AVPT stock is down 8.78% year-to-date.
11. SentinelOne Inc (NYSE:S)
Number of Hedge Fund Holders In Q4 2024: 47
SentinelOne Inc (NYSE:S) is a cybersecurity company that provides AI-powered services for threat prevention and detection.
The stock is down significantly so far in 2025 as it issued revenue guidance for the first quarter and full fiscal year 2026, which fell below Wall Street expectations. The company projected first-quarter revenue of $228 million and full-year revenue of $1.007 billion to $1.012 billion.
Both were lower than analysts’ estimates of $235.1 million and $1.03 billion, respectively. This disappointing outlook was attributed to intense competition in the cybersecurity sector and reduced enterprise spending due to economic uncertainty.
The consensus price target of $26.33 implies 32.57% upside.
S stock is down 10.63% year-to-date.
10. Telecom Argentina SA (NYSE:TEO)
Number of Hedge Fund Holders In Q4 2024: 5
Telecom Argentina SA (NYSE:TEO) is a telecom and cybersecurity company.
The stock is down significantly so far in 2025 due to the stock trading at excessively high valuations since Javier Milei’s election in late 2024 as that allowed improved forex rates and an economic outlook. However, that has changed significantly, especially as significant debt is maturing.
Scotiabank analyst Andres Coello maintained a Sell rating on Telecom Argentina and reduced the price target to $6.20.
The company also reported a 7.7% decline in consolidated revenues in constant currency terms. Q4 service revenues grew by 2.6%, but the broader trajectory is weak.
The consensus price target of $9.17 implies 13.69% downside.
TEO stock is down 15.25% year-to-date.
9. Booz Allen Hamilton Holding Corp (NYSE:BAH)
Number of Hedge Fund Holders In Q4 2024: 48
Booz Allen Hamilton Holding Corp (NYSE:BAH) is a management consulting tech company that mostly works with the government. It focuses on AI and cybersecurity, along with data analytics.
The stock is down significantly so far in 2025 as Pete Hegseth canceled $580 million in Pentagon contracts affecting BAH and other IT contractors.
Moreover, a sector-wide selloff triggered by Accenture’s warning about government spending reductions also caused it to decline.
The consensus price target of $158.27 implies 48.91% upside.
BAH stock is down 17% year-to-date.
8. Ziff Davis Inc (NASDAQ:ZD)
Number of Hedge Fund Holders In Q4 2024: 14
Ziff Davis Inc (NASDAQ:ZD) is a digital media and internet company that also does cybersecurity.
The stock is down significantly so far in 2025, as Ziff Davis reported disappointing annual results for 2024.
Although revenues of $1.4 billion were in line with analyst predictions, earnings per share of $1.42 missed estimates by 25%. Following these results, analysts downgraded their 2025 EPS forecasts from $3.94 to $3.53.
Plus, Wall Street firms have cut their price targets for Ziff Davis after the earnings miss. JPMorgan Chase lowered its target from $70.00 to $60.00, UBS Group reduced its target from $65.00 to $56.00, and Citigroup decreased its target from $58.00 to $51.00.
The consensus price target of $65.67 implies 57.36% upside.
ZD stock is down 23.21% year-to-date.
7. Telos Corp (NASDAQ:TLS)
Number of Hedge Fund Holders In Q4 2024: 8
Telos Corp (NASDAQ:TLS) is a cybersecurity, IT risk management, and cloud security company.
The stock is down significantly so far in 2025 due to Telos reporting Q4 2024 adjusted EPS of -$0.14. It missed the consensus estimate of -$0.09 by $0.05. Revenue for the quarter was $26.37 million.
This was slightly above expectations but down 36% year-over-year. Still, the Secure Networks segment experienced a massive 78% year-over-year revenue drop. It overshadowed a growth in Security Solutions.
Plus, BMO Capital Markets reduced its price target for Telos from $4.50 to $3.00 as the company has had challenges in new government contracts and mixed revenue guidance for 2025.
The consensus price target of $4.13 implies 59.88% upside.
TLS stock is down 24.56% year-to-date.
6. Rapid7 Inc (NASDAQ:RPD)
Number of Hedge Fund Holders In Q4 2024: 45
Rapid7 Inc (NASDAQ:RPD) is a cybersecurity company that provides software and services.
The stock is down significantly so far in 2025 as it reported disappointing fourth-quarter 2024 results, with revenue growth guidance for 2025 projected at only 2% to 3%.
These growth numbers are a sharp deceleration from the 9% growth achieved in 2024. This weak outlook led to a drop.
Professional services revenue declined by 5%, and earnings fell below expectations due to shrinking margins.
The consensus price target of $39.94 implies 36.8% upside.
RPD stock is down 27.42% year-to-date.
5. BigBear.ai Holdings Inc (NYSE:BBAI)
Number of Hedge Fund Holders In Q4 2024: 13
BigBear.ai Holdings Inc (NYSE:BBAI) is an AI company that partners with government agencies and commercial enterprises.
The stock is down significantly so far in 2025, as BigBear.ai reported a net loss of $108 million for Q4 2024. This was five times higher than the previous year’s loss. This translated to a loss of 43 cents per share and exceeded analysts’ expectations of a 4-cent loss.
Revenue for the quarter was $43.8 million, below market expectations. The company projected 2025 revenue between $160 million and $180 million. This fell short of analysts’ estimates of $190 million.
The announcement of a $50 billion reduction in the Department of Defense budget directly impacted BigBear.ai’s core business.
The consensus price target of $5.33 implies 67.45% upside.
BBAI stock is down 28.31% year-to-date.
4. Castellum Inc (NYSEAMERICAN:CTM)
Number of Hedge Fund Holders In Q4 2024: 1
Castellum Inc (NYSEAMERICAN:CTM) is a tech services company that specializes in cybersecurity.
The stock is down significantly so far in 2025 as it completed a $4.5 million public offering of 4.5 million units priced at $1.00 each, including shares and warrants exercisable at $1.08 within 60 days. This caused dilution, and the stock fell.
Moreover, an insider with a 10% stake sold 500,000 shares worth $710,275 just before the dilutive event.
CTM stock is down 44% year-to-date.
3. WISeKey International Holding Ltd (NASDAQ:WKEY)
Number of Hedge Fund Holders In Q4 2024: N/A
WISeKey International Holding Ltd (NASDAQ:WKEY) is a Swiss cybersecurity company that provides security for IoT and digital identity ecosystems.
The stock is down significantly so far in 2025 as WISeKey’s subsidiary SEALSQ raised $10 million in a private placement to fund production facilities and quantum-ready semiconductor development. This raised investor concerns about potential dilution.
Plus, WISeKey reported trailing twelve-month revenue of $20.99 million but a net loss of $17.86 million.
The consensus price target of $4 implies 9.3% downside.
WKEY stock is down 51.30% year-to-date.
2. Quantum Computing Inc (NASDAQ:QUBT)
Number of Hedge Fund Holders In Q4 2024: 6
Quantum Computing Inc (NASDAQ:QUBT) is a tech company that specializes in photonic and quantum optics.
The stock is down significantly so far in 2025 due to the company missing earnings on its Q4 report. Net loss at $0.47 per share far exceeded the prior year’s loss of $0.09 per share.
Revenue fell 17% year-over-year to $62,000 and also missed analyst expectations of $200,000. Operating expenses surged due to stock-based compensation and depreciation costs related to its TFLN chip foundry.
The company has then seen a class action lawsuit alleging that the company overstated its quantum computing capabilities, NASA partnerships, and progress on its thin-film lithium niobate (TFLN) foundry.
Earlier, Capybara Research accused QUBT of fabricating revenues through related-party transactions and overstating its NASA ties.
The consensus price target of $8.5 implies 6.12% upside.
QUBT stock is down 51.60% year-to-date.
1. Arqit Quantum Inc (NASDAQ:ARQQ)
Number of Hedge Fund Holders In Q4 2024: 8
Arqit Quantum Inc (NASDAQ:ARQQ) is a quantum-safe cybersecurity solutions company.
The stock is down significantly so far in 2025 due to volatility after NVIDIA’s GTC event. The stock lost momentum from the initial hype and fell significantly.
Moreover, there has been significant dilution.
The broader quantum computing sector has been facing selloffs and has declined significantly.
The consensus price target of $52 implies 201.8% upside.
ARQQ stock is down 55.64% year-to-date.
While we acknowledge the potential of ARQQ as an investment, our conviction lies in the belief that some 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 ARQQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.