10 Best Cybersecurity Stocks to Buy: Picked By Hedge Funds

8. Varonis Systems, Inc. (NASDAQ:VRNS)

Number of Hedge funds: 39

Market cap: $5.64 billion

Varonis is working on a problem that becomes more important as companies adopt AI: keeping sensitive data from falling into the wrong hands. Its software helps organizations understand where their data sits, who can access it and whether those permissions create security risks. That is relevant when AI applications and agents can reach information that employees previously accessed only through specific systems.

The business is growing. Revenue grew almost 19% in Q2. However, the company is hemorrhaging money. Analysts have also become more cautious. The stock saw several ratings downgrades in October, with price targets moving toward $50. The concern is not that data security lacks demand. It is whether Varonis can turn that demand into sustainable growth and profits quickly enough.

SaaS ARR jumped 52% to $726 million in Q2, although that figure includes customers moving from older licensing arrangements to the cloud. Without those conversions, growth was 25%. It’s still solid, but the difference is worth keeping in mind when judging how quickly the business is actually expanding. Analysts see room for Varonis to benefit as companies look to secure their data before rolling out more AI tools, but the company still needs to deliver on that opportunity, especially at its current valuation.

Varonis was held by 39 hedge funds in Q2, up from 31 in Q1, according to Insider Monkey’s database. The combined stake value almost doubled from $398.0 million to $720.2 million.

7. SentinelOne, Inc. (NYSE:S)

Number of Hedge funds: 41

Market cap: $8.93 billion

SentinelOne has a compelling growth story, but investors still want proof that it can turn that growth into lasting profits. Its AI-native cybersecurity platform helps companies detect and respond to threats across endpoints and cloud environments. Management is also pitching its technology as a way to protect AI systems themselves, not just use AI to improve security.

The latest results gave analysts reasons to remain constructive. Q2 fiscal 2027 revenue grew 21% year over year to $292 million, while annual recurring revenue rose 22% to $1.22 billion. Its non-GAAP operating margin improved to 10%, from 2% a year earlier. Several analysts raised their price targets recently, and the overall rating remains tilted toward Buy, although some analysts remain on the sidelines.

SentinelOne is up against bigger competitors with established customer relationships and a wider range of products. It also continues to lose money under GAAP accounting. For the stock to deliver, the company will need to keep winning customers while improving its margins. Strong growth alone may not be enough.

The number of hedge funds holding S increased from 37 in Q1 to 41 in Q2 2026 in Insider Monkey’s database. Their combined stake value rose from $790.7 million to about $1.05 billion.

6. Zscaler, Inc. (NASDAQ:ZS)

Number of Hedge funds: 52

Market cap: $42.42 billion

Zscaler is benefiting from the shift toward Zero Trust security, which verifies each attempt to access an application instead of assuming that users inside a corporate network are safe. This approach becomes more useful as businesses move workloads to the cloud and introduce AI agents that need controlled access to company systems.

Analysts remain largely positive on Zscaler, with several raising their price targets recently. They see room for the company to grow as businesses invest in cloud security and look for ways to protect AI agents. Zscaler’s fiscal Q4 2026 revenue and annual recurring revenue both grew 25% year over year. Its non-GAAP operating margin also hit a record 24%, showing that the company is making progress on profitability alongside its growth.

The catch is valuation. Zscaler’s share price has moved ahead of the average analyst target, suggesting that some of the optimism is already reflected in the stock. The stock is trading at 53.3x forward earnings.

The company still needs to keep winning large enterprise deals and expand sales of newer products. If growth slows, the premium could become harder to defend.

In Insider Monkey’s database, the number of hedge funds holding ZS increased from 46 in Q1 to 52 in Q2 2026. The combined value of their stakes grew from $1.01 billion to $1.11 billion.

5. Okta, Inc. (NASDAQ:OKTA)

Number of Hedge funds: 58

Market cap: $39.52 billion

Okta’s opportunity comes down to identity. Businesses need to know who is accessing their systems, what that user is allowed to do and how to control access as they adopt AI agents. Okta’s identity platform helps manage those permissions across applications and users, giving it a role as companies work out how to use AI without opening new security gaps.

Analysts generally like this position, and several raised their price targets in September and October. The latest results also showed solid profitability and cash generation. Revenue in Q2 fiscal 2027 rose 11% year over year to $805 million, subscription revenue grew 12%, and remaining performance obligations increased 17%. Free cash flow reached $227 million.

The question is whether Okta can accelerate from its current growth rate. Its identity products are well placed for an AI-heavy future, but the stock has rallied enough that investors need to see continued execution. Competition is another concern, as large cloud and security companies offer identity features of their own.

The number of hedge funds holding OKTA in Insider Monkey’s database increased from 49 in Q1 to 58 in Q2 2026. Their combined stake value rose from $1.30 billion to $1.77 billion.