Wedbush bets on 3 cybersecurity stocks. Why should the AI boom spur them on?

The fall in cybersecurity stocks, which is taking place amid a massive sell-off in the software segment, opens up buying opportunities, according to Wedbush analyst Dan Ives, Yahoo Finance reports. Ives, known for his optimism about the technology sector, identified three cybersecurity companies that he believes have the best prospects and could be "winners" in the new market environment. These include CrowdStrike, Palo Alto Networks and Zscaler.

- Among the companies Dan Ives points to is cybersecurity software developer CrowdStrike - the analyst calls it the "gold standard" in cybersecurity. Wedbush estimates that CrowdStrike's cloud platform, Falcon, is becoming increasingly effective as cyber threats intensify, Yahoo Finance points out. Despite CrowdStrike shares down nearly 13% YTD, Ives maintains an "outperform" rating for the stock with a $600 target price. That target implies CrowdStrike stock is up 45% from its Feb. 17 closing level. The company's stock was down 0.8% at the premarket on Feb. 18.

- Ives cites the securities of cybersecurity solutions provider Palo Alto as another idea - the company remains among Wedbush's favorites for 2026, despite the fact that its stock has lost about 12% since the beginning of the year. Ives believes that Palo Alto's strategy to create a unified Prisma AIRS platform (positioning itself as a platform to protect the entire lifecycle of artificial intelligence) and Palo Alto's acquisition of Israeli-American CyberArk (focused on information security and offering identity management) are fundamentally changing the approach to protecting AI infrastructure and data. Palo Alto's actions, the analyst believes, are aimed at reducing "vendor fatigue" and consolidating cybersecurity tools. Ives' target price for Palo Alto securities is $225 apiece. It implies a 38% upside from the Feb. 17 closing level. On Wednesday's premarket, Palo Alto securities are down 7.4% after the company released results for the second fiscal quarter of 2026. They turned out to be mixed: the company exceeded expectations on current indicators, but upset investors with its full-year profit forecast.

- Ives names Zscaler, a developer of a secure cloud-based gateway for enterprise Internet access, as the third company to watch right now in the cybersecurity sector . This company, according to Ives, is a "premium position to own." Zscaler is dedicated to cloud cybersecurity under the Zero Trust model, providing secure access to corporate resources for users, devices and applications without VPNs. The analyst notes that the company's strategy is driving steady growth in subscriptions as organizations capture the rapid increase in AI traffic. Ives' target price on Zscaler shares is $350 apiece. According to the analyst, the securities could rise 103% from their closing level on Feb. 17. At the premarket on February 18, they were declining by 0.5%.

Ives' optimistic stance on cybersecurity stocks stems from a harsh reality, Yahoo Finance notes: as hackers increasingly use AI to launch faster and more sophisticated attacks, corporations are actually being forced to ramp up defense spending. According to Wedbush, cybersecurity vendors are raising their sales targets by 30% this year in an effort to keep up with growing demand. This suggests that even as overall enterprise software budgets are being slashed, security remains a priority.

"AI will be a powerful growth driver for the entire cybersecurity sector in the coming years - as the range of what needs to be protected expands: AI application scenarios, enterprise data, endpoint devices," the analyst said .

However, against the backdrop of a large-scale selloff in software developers' securities and, in general, in stocks from the U.S. technology sector, key industry funds in the cybersecurity sector have been underperforming over the past month: the First Trust Nasdaq Cybersecurity ETF (CIBR) lost about 9%, and the WisdomTree Cybersecurity Fund (WCBR) sagged about 5%. YTD losses are about 3% and 7%, respectively, according to Yahoo Finance.

Analysts' opinions on the cybersecurity sector in the market are divergent, emphasizes Yahoo Finance. Optimists believe that AI is only increasing the number of vulnerabilities in corporate systems, which means that companies will spend more and more on defense. Skeptics argue that huge spending on AI implementation may eat up other IT budget lines, and then cybersecurity players will have to fight hard for the same money.

Big Tech companies - Amazon, Google and Meta - will collectively invest more than $500 billion in AI infrastructure in 2026 - and it would seem that this is where the "AI tax" that skeptics warn about should manifest itself. However, the figures show the opposite: 85% of companies have increased their cybersecurity budgets in 2025, and almost 90% plan to do the same in 2026, writes Techerati.

This article was AI-translated and verified by a human editor