Previously we covered the 10 Best Cybersecurity Stocks to Buy According to Analysts. In this article we are going to take a look at hedge funds’ top cybersecurity stock picks. Hedge funds are highly sensitive to valuation multiples. When high-growth cloud security stocks reach “nosebleed” price-to-sales multiples, hedge funds often take profits and rotate into diversified giants or enterprise consolidators. That’s why we are expecting to see a different picture in this analysis.
Artificial intelligence is creating a bigger market for cybersecurity companies, but not for the reason investors might expect. The technology is helping defenders find weaknesses faster, while giving attackers new ways to exploit them. That leaves businesses facing a growing security challenge just as they begin integrating AI into more of their operations.
The problem has become increasingly visible. On October 23, Reuters reported that AI had contributed to a doubling of the number of digital vulnerabilities discovered year over year, according to research from cybersecurity firm VulnCheck. Recent flaws in widely used software also triggered disruptions, with some website operators temporarily taking their services offline rather than risk exploitation. Security experts warned that AI could shorten the time between discovering a vulnerability and developing a way to exploit it. The extent to which this will translate into successful attacks remains uncertain, but companies have less room to ignore weaknesses in their systems.
Businesses appear to be taking the risk seriously. PwC’s October 2026 Global Digital Trust Insights survey found that 84% of security and finance leaders expect their cybersecurity budgets to increase over the next 12 months, up from 78% a year earlier. AI is also becoming a direct spending priority: 58% of security leaders ranked it among their top cybersecurity budget priorities. Yet half of the security leaders surveyed said attacks targeting AI systems were among the threats their organizations were least prepared to handle. That gap between investment and preparedness gives cybersecurity providers a practical opportunity to address a problem businesses are still struggling to solve.
The opportunity extends beyond protecting companies from AI-powered attacks. As businesses deploy AI agents and connect them to internal systems, they need stronger controls over identities, permissions and access to sensitive data. They also need tools that can detect suspicious activity and respond quickly, ideally without overwhelming already stretched security teams. Cybersecurity companies that can automate more of this work may be well positioned to benefit.
Our Methodology
For this list, we looked at cybersecurity stocks that saw an increase in hedge fund ownership in Q2 2026 compared with the previous quarter, based on Insider Monkey’s database. We then ranked the stocks by the number of hedge funds holding them at the end of Q2, from highest to lowest. When two stocks had the same number of hedge fund holders, we ranked the company with increased hedge fund interest in Q2 higher.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
These strategy returns are measured through June 2, 2026.
10. Qualys, Inc. (NASDAQ:QLYS)
Number of Hedge funds: 34
Market cap: $7.88 billion
Qualys is a profitable cybersecurity business, but analysts are not convinced the stock has much room left at its current price. Recent ratings still lean toward Hold, even after some analysts raised their price targets in October. The bullish case centers on its vulnerability management and exposure management tools. As companies add AI applications, they also add systems, data paths and permissions that need to be monitored. Qualys wants to bring that work together rather than make customers manage every risk separately.
Its Q2 revenue rose 11% year over year to $182.2 million, and the company raised its full-year revenue guidance. It also generated $52.4 million in GAAP net income, so this is not a business burning cash to chase the AI story. The concern is growth. Investors want stronger acceleration before assigning the stock a higher multiple. Qualys has the profits and products, but it still needs to show that demand for AI security can translate into faster growth.
The number of hedge funds holding QLYS in Insider Monkey’s database increased from 33 in Q1 to 34 in Q2 2026. The combined value of their stakes rose from $434.8 million to $719.3 million.
9. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Number of Hedge funds: 37
Market cap: $16.32 billion
Check Point is a different kind of cybersecurity bet. It is an established, cash-generative business, but its overall growth has been slow. In Q2 2026, revenue rose just 1% year over year to $674 million. The encouraging part was security subscription revenue, which increased 12%, while non-GAAP earnings per share grew 8%.
That is where the analyst debate sits. Recent ratings have been mixed, with many analysts maintaining Hold recommendations even as some raised their price targets. Those who are more positive see scope for subscriptions and newer security products to become a bigger part of the business. Others want to see stronger overall revenue growth before becoming more enthusiastic.
Check Point also has an opportunity to help businesses secure increasingly complex networks and AI-related workloads. Still, that opportunity has yet to produce the kind of growth reported by some larger platform competitors. The stock may appeal to investors who value profitability and recurring revenue, but a stronger re-rating will be difficult to justify until growth improves.
The number of hedge funds holding the stock in Insider Monkey’s database increased from 33 in Q1 to 37 in Q2 2026. Their combined stake value, however, soared from $353.7 million to $813.9 million.
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.
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.
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