10 Best Cybersecurity Stocks to Buy: Picked By Hedge Funds

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4. Fortinet, Inc. (NASDAQ:FTNT)

Number of Hedge funds: 62

Market cap: $135.74 billion

Fortinet’s combination of networking and cybersecurity gives it a different route into the AI opportunity. Its firewalls and secure networking products protect data as it moves between users, applications and cloud environments. The company also develops hardware designed for security workloads, which can help customers manage performance as networks carry more traffic.

Fortinet had a strong Q2 2026, with revenue up 26% year over year to $2.05 billion. Product revenue jumped 52%, while billings grew 33%, prompting the company to raise its full-year revenue forecast. Analysts see plenty to like in the business, particularly the demand for its integrated security platform. Still, some have become more cautious about the stock after its strong rally. The concern is not so much about Fortinet’s business, but how much of that growth investors have already priced in.

Fortinet looks well positioned to benefit from rising demand for cybersecurity, but a strong business does not automatically make a stock a good buy at any price. Investors will need to see the company keep delivering if its valuation is to be justified.

The number of hedge funds holding FTNT increased from 52 in Q1 to 62 in Q2 2026. The combined value of their stakes rose from $2.98 billion to $6.24 billion.

3. Cloudflare, Inc. (NYSE:NET)

Number of Hedge funds: 87

Market cap: $116.72 billion

Cloudflare sits at the intersection of cybersecurity and the infrastructure needed to run AI applications. Its global network helps customers secure websites and applications, filter malicious traffic and improve performance. As the internet handles more machine-to-machine traffic from AI agents, Cloudflare could benefit from demand for both security and connectivity.

That opportunity has kept analysts broadly positive. Several analysts raised their price targets in October, citing Cloudflare’s growth prospects and its role in the changing internet landscape.

The company’s Q2 2026 revenue rose 36% year over year to $696.1 million, while current remaining performance obligations grew 35%. Those figures suggest demand remains strong, although Cloudflare is still reporting a GAAP operating loss.

The main concern is how much investors are paying for that growth. The stock is trading at 168x its forward earnings, although one needs to take that with a grain of salt, as razor-thin margin expectations have bloated the valuation. That said, the company is yet to prove that it can expand its margins.

The AI opportunity is real, but investors should not assume Cloudflare will capture all the value created by AI-driven internet traffic.

The number of hedge funds holding NET in Insider Monkey’s database increased from 84 in Q1 to 87 in Q2 2026. Their combined stake value rose from $3.55 billion to $3.98 billion.

2. Palo Alto Networks, Inc. (NASDAQ:PANW)

Number of Hedge funds: 89

Market cap: $328.59 billion

Palo Alto Networks combines a broad security platform with strong growth in its newer products. The company covers network security, cloud security and security operations, helping customers consolidate tools across a complex mix of systems. That strategy is particularly relevant as businesses add AI applications and look for a single platform to manage more of their security needs.

Analysts remain broadly positive, and several raised their price targets. Their main argument is that Palo Alto can keep expanding its newer security businesses while benefiting from companies that want fewer vendors and better integration. Its fiscal Q4 2026 revenue grew 34% year over year to $3.41 billion, while next-generation security annual recurring revenue jumped 63% to $9.10 billion.

The valuation is the main drawback. Palo Alto’s forward P/E of 93x already reflects high expectations, and the average analyst price target is close to its current share price. Strong results may therefore be needed just to sustain the stock’s premium.

The number of hedge funds holding PANW in Insider Monkey’s database increased from 87 in Q1 to 89 in Q2 2026. Their combined stake value rose sharply from $2.12 billion to $5.49 billion.

1. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Number of Hedge funds: 89

Market cap: $275.02 billion

CrowdStrike has become one of the leading names in cybersecurity by bringing endpoint protection, cloud security and other tools together on its Falcon platform. Customers can add more protection without assembling a separate product for every threat, which helps CrowdStrike expand its relationship with existing accounts.

Analysts remain broadly bullish, and several raised their price targets in recent weeks. The key support for that view is the company’s recurring revenue growth and growing adoption of its broader platform. In Q2 fiscal 2027, CrowdStrike generated record net new annual recurring revenue of $333 million, up 51% year over year. Its Falcon Flex business also saw annual recurring revenue grow 101% to $2.29 billion, while free cash flow reached $377 million.

CrowdStrike still has plenty going for it, but its high valuation means there’s not much room for a slowdown. It needs to keep bringing in new customers and getting existing ones to spend more, all while competing with Palo Alto Networks and other deep-pocketed rivals. Its broad platform gives it room to grow, but the company has to deliver on those expectations.

Hedge fund interest in the stock also picked up. Insider Monkey’s database showed that 89 hedge funds held CrowdStrike at the end of Q2 2026, up from 79 in Q1. The combined value of their reported stakes climbed from $2.52 billion to $4.54 billion.

While CRWD is the most popular cybersecurity stock among hedge funds, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than CRWD that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.

READ ALSO: 10 Stocks You Are Selling and Insiders Are Buying and 10 Best Dividend Stocks with Monthly Payout

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