When it comes to cybersecurity, I don't know much about how it works from an experiential perspective. So, I suppose one could say I'm an outsider. But even an outsider like me understands that businesses must invest in cybersecurity in 2025. And I can appreciate that the need for cybersecurity will only get bigger in the coming years.
Research firm Gartner predicts that spending for cybersecurity will increase by 15% in 2025 alone, which is huge when looking at an entire market. Gartner further predicts that the cybersecurity threat will increasingly come from generative artificial intelligence (AI) applications, highlighting how the threat evolves over time. Cybersecurity companies, consequently, must be fast-changing as well.
When it comes to the future of cybersecurity, I believe that CrowdStrike(NASDAQ: CRWD), Rubrik(NYSE: RBRK), and Palo Alto Networks(NASDAQ: PANW) are three cybersecurity stocks that investors should consider here in May. Here's why.
Image source: Getty Images.
1. CrowdStrike: The top dog
When it comes to cloud-based cybersecurity, CrowdStrike is routinely recognized as a top player in the space. The company provides a subscription platform for its products, providing it with recurring revenue. It completed its fiscal 2025 on Jan. 31. And it ended the year with annualized recurring revenue (ARR) of $4.2 billion, which was up 23% from the end of fiscal 2024.
CrowdStrike's Falcon platform isn't a single cybersecurity product but is composed of 29 separate software modules that customers can use to meet their needs. The company is currently modifying its business model with this. Before, customers would select what they wanted and pay the subscription price. Now, customers can agree to a certain level of spending and use it on the module they want.
It's called Falcon Flex, and the hope is that this will lower the bar when it comes to experimentation with CrowdStrike's modules. As customers try new modules for the first time, the hope is that they'll see the value and use them regularly. In other words, CrowdStrike plans to boost growth by making it easier for existing customers to adopt more software modules, which sounds like a good idea to me.
As of the end of its fiscal 2025, only 21% of CrowdStrike's customers used eight or more of its software modules. Getting its customers to use more modules is quite significant for its long-term growth. The recent launch of Falcon Flex could help it get there, and it's one reason I like CrowdStrike stock today.
2. Rubrik: The niche up-and-comer
Many investors know about CrowdStrike, but far fewer have heard about Rubrik. That's understandable. It only went public about 13 months ago, so it's a new company for most investors. Moreover, with $887 million in trailing-12-month revenue, it's considerably smaller than other publicly traded cybersecurity companies.
Whereas CrowdStrike tries to prevent attacks, Rubrik gives customers a secure way to prepare for an attack beforehand and get back to normal after it happens. The reality is that even if cybersecurity players stop most attacks, they don't stop all of them. And the risk of one getting through might only increase with advances in AI.
The good thing about Rubrik's focus on this aspect of the market is that it's not a direct competitor with CrowdStrike or others -- in fact, it partners with CrowdStrike. This gives the up-and-coming company its own little corner of the market, and it's growing fast. Like CrowdStrike, Rubrik's fiscal 2025 ended on Jan. 31. It ended fiscal 2025 with an ARR of just over $1 billion, which was up a strong 39%.
Investors should consider Rubrik stock now, not only because it's fast-growing. The company also just started generating positive free cash flow. This profitability metric suggests that management can scale its business while maintaining operational excellence. This combination could soon start elevating the attention it receives from the investment community.
3. Palo Alto Networks: The relentless consolidator
Rubrik is a niche player, but even CrowdStrike could be considered niche compared to how broad Palo Alto Networks is with its vision. It has both hardware and software solutions. Its software products can be used on the cloud or on-premises. It's a large portfolio of products that have been both built and acquired over many years, which makes it one of the best cybersecurity stocks for investors interested in covering all the bases.
Indeed, Palo Alto Networks is always eager to acquire another business -- it already acquired one in 2025 by buying Protect AI for $700 million. While there are risks to being a company that makes a lot of acquisitions, the company has historically done it well, and it is paying off with growth. For example, it just completed its fiscal third quarter of 2025, showing good growth in its newer products.
Specifically, Palo Alto Networks grew its ARR for Next-Generation Security by 34% year over year to over $5 billion. And demand for its products overall is promising. In Q3, its remaining performance obligations (its future revenue under contract) grew by 19% to a whopping $13.5 billion. In short, the outlook for this company is as strong as ever, making Palo Alto Networks another cybersecurity stock to consider here in May.
In closing, the subject of valuation for these companies is also important, but that's a completely different subject from the things that I've discussed here. But allow me to say that the valuation for Rubrik stock is far lower than that for CrowdStrike stock, and it's comparable to the valuation for Palo Alto Networks. But I believe that Rubrik, being a smaller company, has a chance for a better growth rate from here.
Rubrik is probably the riskiest of these three stocks, given its size and newcomer status. But for investors willing to take a shot with a less-proven player, Rubrik might be the best value for long-term investors.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool recommends Gartner and Palo Alto Networks. The Motley Fool has a disclosure policy.
