Global research company Gartner estimates that 45% of all businesses worldwide will see their supply chains attacked by cyber criminals by the end of 2025.
The International Monetary Fund (IMF) believes the annual cost of cybercrime could reach $27 trillion by 2027.
What does this mean? Cybercrime is increasing - but that’s not all…
Cybercrime is also getting more complex because of AI.
Surfshark reported that AI deepfakes increased by 250% from 2024 to 2025. Criminals are using artificial intelligence to hack faster and smarter than ever before.
You’d think that would mean more people than ever work in cybersecurity.
However, there’s actually not enough workers in the space, despite demand rising.
According to Cyberseek, there's a massive gap between cybersecurity jobs available and professionals qualified to fill them.
Experts believe there aren't even enough businesses to meet the demand for protection.
This sounds bad. But it’s actually creating a potential investment opportunity that investors may be able to profit from.
How? Major cyber security companies are getting ready to jump on these issues and job gaps, eating up market share in the industry at a rapid pace.
Next, we’ll break down why these job gaps create potential opportunities, what investors need to watch out for, what could be coming for cybersecurity in 2026.
Before we dive deeper: Our market analysts dug even deeper into this shift in our Market Briefs Pro newsletter.
If you want to see even more data and research on cybersecurity and more, subscribe to Market Briefs Pro.
Why The Cybersecurity Gap Creates Potential Investment Opportunities
When there aren't enough workers or companies to meet demand, money flows to whoever can deliver.
Gartner expects business spending on cybersecurity to reach a 3-year high in 2025 at $212 billion.
That spending has to go somewhere.
Our analysts sat down with Brandon Rule, a small business owner in upstate New York. We asked him what it means that small businesses are disproportionately affected by cybercrime.
"I'd certainly put a higher priority on it," he said.
Brandon represents millions of small business owners who know they need protection but have limited options for where to spend their money.
So where is that $212 billion going?
It's flowing to qualified, reputable cybersecurity companies that currently exist and are quickly taking market share from weaker competitors.
More market share = more profits for these companies.
And more profits may create opportunities for investors to benefit.
How Do I Choose the Right Cybersecurity Stock?
Our analysts use several criteria when evaluating opportunities in this space:
Market Position vs. Competitors
Is the company a market leader or playing catch-up? Companies with established customer bases have an advantage when budgets tighten.
Service Diversification
Does the company offer multiple security solutions, or just one niche product? Diversified companies can serve more customer needs and reduce risk.
Profitability Timeline
Is the company profitable now, or still burning cash? Growth stocks can succeed, but they're riskier during market uncertainty.
Strategic Acquisitions
Is the company buying competitors and filling gaps in its offerings? Smart acquisitions signal leadership and long-term thinking.
Customer Concentration
Does the company rely on a few big customers, retail customers, or serve thousands of businesses? Diversified customer bases reduce revenue risk.
Investors should also consider their individual goals, investment timeline, and risk tolerance when investing in anything, including cybersecurity stocks.
But, answering these questions is the first step to deciding if cybersecurity stocks are right for your portfolio.
Who Is Leading in Cybersecurity? The Comeback Story
CrowdStrike (CRWD) has had its ups and downs over the last few years.
Reminder: CrowdStrike is a cloud-based platform offering data protection, threat detection, and cyber threat mitigation to businesses.
In July 2024, a major outage for CrowdStrike led to one of the biggest cybersecurity blackouts in history.
8.5 million businesses and consumers were affected.
The company had to pay $88 million to customers because of the service lapse. As a result, its reputation took a hit, and so did its stock.
Since then, shares of the company have made a comeback.
CrowdStrike is up around 40% as of December 2025, beating the S&P 500.
Why? Despite the setback, CrowdStrike remains one of the only major providers of comprehensive cybersecurity in the field.
The company reported a strong Q3 and raised its year-end guidance for 2025. Its systems are completely customizable to businesses, making it effective across industries.
Top 3 Cybersecurity Companies: Strategic Moves
Another company making strategic moves is Palo Alto Networks (PANW).
Palo Alto focuses primarily on network and cloud security.
Its latest fiscal Q4 2025 earnings beat Wall Street expectations.
The company reported $0.95 in adjusted earnings per share and $2.5 billion in revenue - about $500 million higher than fiscal Q3.
Here's a comparison of how the major players in sthe cyber security space stack up:
| Company | Market Cap | Primary Focus | Profitability | Recent Strategic Move |
| CrowdStrike | $100B+ | Cloud-based threat detection | Yes | Launched Agentic AI (2025) |
| Palo Alto Networks | $100B+ | Network & cloud security | Yes | Acquired CyberArk (2025) |
| Zscaler | ~$37B | IoT & AI scanning | Yes | Acquired Avalor & AirGap |
| Rubrik | ~$16B | Data storage & recovery | No | IPO in 2024, growing subscriptions |
| SentinelOne | ~$5B | AI threat detection | No | Declining since 2021 IPO |
Looking for more research? Or market analysts broke down each of the companies above in-depth in our Market Briefs Pro report.
You can learn more about Market Briefs Pro and subscribe here.
What Are the Top 3 Cybersecurity Companies Doing Differently?
The companies at the top share three characteristics:
1. They're filling multiple gaps at once
Palo Alto didn't just buy one company. It bought two in less than a year, covering data protection and analytics. CrowdStrike didn't just fix its outage problem - it launched new AI technology.
When you're one of the only companies that can meet demand, customers have nowhere else to go.
2. They're using AI strategically, not as a replacement
Cybersecurity businesses are turning to AI to fill some of the worker gap. But experts in the field agree: AI will need to be led by qualified humans in the future.
The winning companies combine AI technology with human expertise. That's harder to replicate than pure software.
3. They're buying smaller competitors before they become threats
Mergers and acquisitions aren't just common in cybersecurity - they're becoming standard.
When a large company acquires a smaller one, it removes a competitor and adds new capabilities in one move. That consolidation accelerates market share gains.
Should You Invest in Cybersecurity Stocks?
That's a decision only you can make based on your financial situation and goals.
But here are the questions our market analysts consider:
What's your risk tolerance?
Established, profitable cybersecurity companies offer stability. Smaller growth companies offer higher potential returns but more volatility.
What's your time horizon?
The cybersecurity consolidation trend could take years to fully play out. Short-term traders face different risks than long-term investors.
How much diversification do you want?
Individual stocks concentrate risk in one company. ETFs spread that risk across multiple cybersecurity businesses.
Do you understand the business model?
Can you explain how the company makes money and why customers choose it over competitors? If not, you might need more research.
These are educational questions, not financial advice. But they're the same questions our Pro analysts use when evaluating opportunities in market shifts.
Brandon Rule, the small business owner we interviewed, shared his own thought process:
"I feel like we aren't a big enough target, and our current information is all locally stored. But on the other hand, that can also make us more vulnerable since we won't have cloud backups available. It is something we are looking into but it is maybe not as high a priority as it perhaps should be."
Brandon represents the reactive mindset that's common in cybersecurity. Many consumers and businesses don't realize they need protection until they're attacked.
By then, it's too late.
That reactive behavior creates sustained demand for cybersecurity services - which benefits the companies providing them.
What's the Best Cybersecurity ETF?
There is never a one size fits all answer to the “best” investment - that’s also true in the cybersecurity space.
But, if you prefer broader exposure without picking individual stocks, ETFs offer diversification across multiple cybersecurity companies.
ETFs spread your investment across dozens of companies in the industry. That reduces the risk of any single company underperforming.
The tradeoff? You also limit your upside if one particular company dominates.
So consider factors like:
- Expense ratios (how much the fund charges)
- Holdings concentration (is it diversified or top-heavy?)
- Geographic exposure (U.S. only or global?)
- Market cap focus (large established companies or small growth plays?)
These details matter when comparing options.
Risks: What Could Go Wrong?
Here's the potential risks our analysts are watching that could derail the cybersecurity consolidation shift:
The Reactive Problem
Many consumers and businesses don't realize they need protection until they're attacked. If a major breakthrough reduces cyber threats, demand could drop unexpectedly.
Worker Shortage Gets Worse
There's already a shortage of cybersecurity professionals. If that gap widens, even the best companies might struggle to deliver services effectively.
Cybercrime Evolves Faster Than Defense
Cybercrime is increasing and getting more complex every day. Even top companies could fall behind if criminals develop new attack methods faster than defenses improve.
Consolidation Slows Competition
When a few large companies dominate an industry, innovation can slow. Smaller disruptors might struggle to compete, reducing options for customers.
Economic Downturn Cuts Budgets
If businesses face financial pressure, cybersecurity might get cut from budgets despite the risks. That would hurt revenue across the industry.
Cybersecurity Stocks: Frequently Asked Questions
How do I choose the right cybersecurity stock?
Evaluate market position, service diversification, profitability timeline, strategic acquisitions, and customer concentration.
Companies passing these tests are more likely to succeed during industry consolidation.
What are the top 3 cybersecurity companies?
As of late 2025, CrowdStrike, Palo Alto Networks, and Zscaler are in a position to lead the industry, and are a few of the names our analysts are keeping an eye on in 2026.
All three are profitable and making acquisitions to expand their offerings.
Who is leading in cybersecurity?
CrowdStrike and Palo Alto Networks are taking market share through innovation and strategic acquisitions while smaller competitors struggle.
Should you invest in cybersecurity stocks?
That depends on your risk tolerance, time horizon, and financial goals.
Cybersecurity spending is growing, but individual company success varies. Consider whether you understand the business model and can handle potential volatility before investing.
What's the best cybersecurity ETF?
The best ETF depends on your specific needs regarding expense ratios, holdings concentration, geographic exposure, and market cap focus.
ETFs offer diversification but limit upside compared to individual stock picks.
The Bottom Line: Market Consolidation Creates Opportunity
The cybersecurity industry is at a turning point.
Either the current leaders will continue taking market share for years to come, or new players will emerge and dominate in unexpected ways.
Either way, cybercrime costs are increasing. Businesses have no choice but to spend on protection.
With a shortage of workers and companies to meet that demand, spending is consolidating with the strongest players in the field.
But here's the thing: This article only scratches the surface of this shift.
Our market analysts dove even deeper into the opportunities, data, and research in Market Briefs Pro.
We analyzed multiple companies across different market caps, profitability levels, and strategic positions.
Market Briefs Pro is a once-a-week research report that gives you an edge on Wall Street, helping you discover potential investing opportunities before the rest of the market catches on.
Get our full research report on cybersecurity consolidation, and our entire catalog of investment reports, by subscribing to Market Briefs Pro.
