Despite a booming tech landscape, cybersecurity stocks have underdelivered in 2025. While there have been some stellar individual performers within this area of the market, the sector as a whole hasn’t matched the broader Technology sector.
From an operational perspective, however, performance has been very strong recently with many cybersecurity companies posting record revenues amid the AI revolution. Here’s a look at some highlights from recent earnings.
CrowdStrike: Protecting Firms Against AI Threats
CrowdStrike’s third quarter fiscal 2026 earnings1 saw the company post revenue of $1.23 billion, an increase of 22% year on year. Annual recurring revenue (ARR) grew 23% year over year to $4.92 billion.
In terms of profitability, CrowdStrike’s non-GAAP net income for the quarter was a record $245.4 million, up 29% year on year. Free cash flow was $295.9 million versus $230.6 million in the third quarter of fiscal 2025.
On the Q3 earnings call2, CEO George Kurtz talked about how organizations of all sizes are in the midst of AI transformations and how AI agents are rapidly expanding the attack surface. He also talked about the importance of a single, comprehensive cybersecurity platform - such as CrowdStrike - in the fight against AI-powered threats, explaining that when a firm has multiple platforms, it creates vulnerabilities.
It’s worth pointing out that since CrowdStrike’s Q3 earnings, many Wall Street firms have raised their price targets3 for the cybersecurity stock. Currently, a number of firms have targets of $580 or higher.
Palo Alto Networks: Strong Growth in Next-Gen Security
Turning to Palo Alto Networks, its most recent earnings, for the first quarter4 of its fiscal 2026, showed that the company is growing at a healthy rate at present. Revenue for the period rose 16% year over year to $2.5 billion while non-GAAP net income jumped 21% to $662 million.
Note that growth in the company’s Next-Generation Security segment - which provides comprehensive cybersecurity protection to customers via a “platformization” model - was higher. Here, ARR was $5.9 billion, up 29% year on year.
Looking ahead, Palo Alto Networks expects its Next-Generation Security segment to continue driving growth. Currently, it’s targeting $15 billion in Next-Generation Security ARR by 2030.
Acquisitions are also expected to drive growth. In the company’s Q1 earnings, it announced the acquisition of Chronosphere, a next-generation observability platform for the AI data center era that is currently seeing triple-digit growth in ARR.
While Palo Alto Networks stock fell after earnings, analysts remain bullish on the name. Currently, a number of Wall Street firms have price targets of $250 or higher.
ZScaler: A Smaller Cybersecurity Player Growing Quickly
Zscaler is a smaller player in the cybersecurity space. However, recent earnings have shown that the company should not be underestimated. For the quarter5 ended October 31, (the first quarter of fiscal 2026), revenue came in at $788.1 million, an increase of 26% year over year. Non-GAAP net income was $159.5 million compared to $124.3 million in the first quarter of fiscal 2025.
On the earnings call6, management pointed out that Zscaler is one of only five enterprise SaaS companies with over $3 billion in ARR growing at over 25%. It also noted that for Q1, it posted a rule of 40 score of 78, which is relatively rare.
Like CrowdStrike, management highlighted the risks of AI on the earnings call, stating that bad actors are using AI to dramatically increase the speed and effectiveness of cyberattacks. It added that AI agents are increasingly becoming the weakest link in enterprise security.
This backdrop is leading to strong growth in Zscaler’s AI security pillar. This grew over 80% year over year in Q1 and has already exceeded the company’s FY2026 target of $400 million ARR, three quarters earlier than expected.
Okta: Helping Businesses with Identity Management
Finally, turning to identity management specialist Okta, it’s also having a lot of success at the moment. For the third-quarter of its fiscal 20267, the company generated revenue of $742 million, up 12% year on year. Non-GAAP net income was $152 million, 26% higher than in the prior-year period. At the end of Q3, the company’s remaining performance obligations (RPO) was $4.3 billion - up 17% year on year.
On Okta’s Q3 earnings call8, management highlighted the substantial opportunity that could potentially lie ahead due to the rise of AI agents. As enterprises begin to use agentic AI, they will face a complex challenge in identity and access management. According to CEO Todd McKinnon, the company has experienced a surge in inbound interest for its Auth0 for AI Agents platform in recent months. Already, it has had discussions with over 100 customers in relation to the service.
Is There an Opportunity in Cybersecurity Stocks Today?
Put all this together, and it’s clear that cybersecurity companies have momentum at present. Revenues are rising sharply, and earnings and cash flows are also trending up. This operational momentum is not reflected in stock prices, however. So, there could potentially be an opportunity here while there is a disconnect between operational strength and stock price performance.
Footnotes:
1CrowdStrike, CrowdStrike Reports Third Quarter Fiscal Year 2026 Financial Results, as of December 2, 2025
2Investing.com, Earnings call transcript: CrowdStrike beats Q3 2026 forecasts, stock rises, as of December 2, 2025
3Investing.com, CrowdStrike Holdings Inc (CRWD), as of December 5, 2025
4Palo Alto, Palo Alto Networks Reports Fiscal First Quarter 2026 Financial Results, as of November 19, 2025
5Zscaler, Zscaler Reports First Quarter Fiscal 2026 Financial Results, as of November 25, 2025
6The Motley Fool, Zscaler (ZS) Q1 2026 Earnings Call Transcript, as of November 25, 2025
7Okta, Okta Announces Third Quarter Fiscal Year 2026 Financial Results, as of December 2, 2025
8Investing.com, Earnings call transcript: Okta’s Q3 2026 solid results boost stock by 1.96%, as of December 3, 2025
