Blogs -Cybersecurity Continues To Lead Cloud Stocks

Cybersecurity Continues To Lead Cloud Stocks


September 22, 2022

author

Beth Kindig

Lead Tech Analyst

This article was originally published on Forbes on Sep 16, 2022,03:24pm EDT

Last June, we discussed key reasons that cybersecurity stocks would hold up particularly well compared to other cloud verticals. The analysis pointed to enterprise spending expected to increase in 2022 from the previous year, according to Chief Information Security Officer (CISO) surveys.

Considering the level of cloud spending in both 2020 and 2021, an increase on already high budgets is impressive. The CISO surveys state that 44% will increase budgets in 2022 compared to 41% in 2021 and only 2% are expect to decrease compared to 6% the previous year.

In a similar study from PricewatershouseCooper, 69% predict a rise in cyber spending for 2022 and 26% expect a surge of 10% or higher spending year-over-year. This survey was done across a broader C-suite and executive sampling. 

Our analysis in June also pointed out that according to a Gartner survey, 88% of the Board of Directors viewed cybersecurity as a business risk. According to Paul Proctor, VP at Gartner, “The influx of ransomware and supply chain attacks seen throughout 2021, many of which targeted operation- and mission-critical environments, should be a wake-up call that security is a business issue, and not just another problem for IT to solve.”

We had also stated on Fox Business News that a small cohort of companies emerged this past quarter to increase the top line while also reporting narrowing losses on the bottom line. We feel not losing site of opportunities during selloffs is how generational wealth is built.

Sign up for I/O Fund's free newsletter with gains of up to 403% - Click here

Cybersecurity Stocks Report Another Strong Quarter in 2022

In Q2, cybersecurity stocks did not disappoint with revenue beats across the board. Although SentinelOne had the largest revenue beat, Crowdstrike had the largest beat from a higher revenue base.

Chart: Cybersecurity Stocks Q2

Source: YCHARTS

We pointed out on Twitter that one reason for the strong beats is that cybersecurity is not subject to discretionary spending.

Cybersecurity stocks tweet by Beth Kindig

Source: Beth Kindig

Sign up for I/O Fund's free newsletter with gains of up to 403% - Click here

Palo Alto Networks and Crowdstrike have strong bottom lines and this is one reason both stocks have outperformed the Nasdaq this year. With that said, high growth is starting to gain traction again as SentinelOne and Zscaler have the stronger price action in the last 30 days.

Chart: Cybersecurity stocks Adj. EPS

Source: YCHART

In the chart below, we see a handful of cybersecurity stocks have been able to grow free cash flow, such as Crowdstrike, Zscaler and Palo Alto Networks. The strong free cash flow is occurring in addition to growing the top line, which indicates cybersecurity is not a “growth at all costs” industry.

Chart: Cybersecurity stocks free cash flow growth

Source: CHARTS AND INVESTOR RELATIONS

Conclusion:

Cybersecurity continues to be a top priority in budgets and the results are showing up again in Q2. We found a strong pattern with cybersecurity stocks sustaining growth rates and strong bottom lines in Q1 and also in Q2. The cybersecurity sector overwhelmingly beat estimates compared to other sectors within tech and investors should take notice of this strength.

Gains of up to 2,160% from our Free Newsletter.


Here are sample stock gains from the I/O Fund’s newsletter --- produced weekly and all for free!

2,160% on Nvidia

675% on Bitcoin

*as of Mar 27, 2025

Our newsletter provides an edge in the world’s most valuable industry – technology. Due to the enormous gains from this particular industry, we think it’s essential that every stock investor have a credible source who specializes in tech. Subscribe for Free Weekly Analysis on the Best Tech Stocks.

If you are a more serious investor, we have a premium service that offers lower entries and real-time trade alerts. Sample returns on the premium site include 3,430% on Nvidia, 915% on Chainlink, and 1,020% on Bitcoin. The I/O Fund is audited annually to prove it’s one of the best-performing Funds on the market, with returns that beat Wall Street funds.

beth
head bg

Get a bonus for subscription!

Subscribe to our free weekly stock
analysis and receive the "AI Stock: 5
Things Nobody is Telling you" brochure
for free.

More To Explore

Newsletter

Chart showing retail investor losses compared to institutional investors, highlighting market volatility and the impact of high-frequency trading.

The Harsh Truth: Retail Investors Take the Brunt of Market Losses

Retail investors face significant disadvantages in the stock market, often underperforming institutional investors by a wide margin. Studies show that high-frequency trading firms dominate market acti

March 28, 2025
Futuristic AI data center featuring NVIDIA’s GB200 Superchip, designed for AI superclusters, high-performance computing, and generative AI training with up to 27 trillion parameters.

NVIDIA’s GB200s for up to 27 Trillion Parameter Models: Scaling Next-Gen AI Superclusters

Supercomputers and advanced AI data centers are driving the AI revolution, enabling breakthroughs in deep learning and large-scale model training. As AI workloads become increasingly complex, next-gen

March 21, 2025
NVIDIA Blackwell Ultra GPU unveiled at GTC 2025, revolutionizing AI and HPC with unprecedented efficiency and power.

NVIDIA Blackwell Ultra Fuels AI & HPC Innovation, Efficiency and Capability  

NVIDIA’s latest Blackwell Ultra GPU, unveiled at NVIDIA GTC 2025, is transforming AI acceleration and high-performance computing (HPC). Designed for the “Age of Reasoning,” these cutting-edge GPUs del

March 21, 2025
Nvidia CEO Jensen Huang discusses AI market dominance at GTC 2025, addressing demand concerns and future growth projections.

Nvidia CEO Predicts AI Spending Will Increase 300%+ in 3 Years

Nvidia has traversed choppy waters so far in 2025 as concerns have mounted about how the company plans to sustain its historic levels of demand. At GTC, Huang threw cold water on many of the Street’s

March 20, 2025
AI data centers are driving the AI revolution, but their soaring energy demands pose sustainability challenges. With power consumption projected to rise 160% by 2030, data centers are integrating brown, clean, and renewable energy sources. Goldman Sachs predicts 40% of new capacity will come from renewables, but can solar, wind, and nuclear sustain AI’s 24/7 operations? Explore how hyperscalers are evolving their energy strategies to meet growing AI demands.

AI Data Center Power Wars: Brown vs. Clean vs. Renewable Energy Sources

AI data centers are at the heart of the AI revolution, but their massive energy demands raise critical questions. With power consumption expected to grow 160% by 2030, data centers are turning to a mi

March 19, 2025
Natural gas pipelines supporting AI data centers as energy demand surges, with Texas and Louisiana emerging as key hubs for AI infrastructure growth.

Why Gas Pipelines Are the Unsung Heroes of AI Data Center Expansion

Natural gas is emerging as the backbone of AI data center expansion, with demand expected to reach up to 6 billion cubic feet per day by 2030. As AI-driven infrastructure surges, data centers are turn

March 19, 2025
Alibaba’s AI revenue growth accelerates, but remains significantly lower than U.S. tech leaders like Microsoft, highlighting China’s competitive AI landscape.

Alibaba Stock: China Has Low AI Revenue Compared to United States

Alibaba’s AI-driven cloud revenue is surging with six consecutive quarters of triple-digit growth. However, its AI earnings remain a fraction of what U.S. tech giants report, with Microsoft leading at

March 14, 2025
By 2030, AI data centers may consume 9% of U.S. electricity as GPU power usage surges, with Nvidia’s GB200 reaching 2,700W. To ensure sustainability, data centers are adopting long-term PPAs and exploring high-efficiency energy sources like nuclear and SOFCs.

Unlocking the Future of AI Data Centers: Which Fuel Source Reigns Supreme in Efficiency?

AI data centers are projected to consume 9% of U.S. electricity by 2030, driven by soaring GPU power demands, with Nvidia’s GB200 reaching 2,700W—a 300% increase over previous generations. As AI racks

March 13, 2025
Tesla faces declining deliveries in 2024 and mounting challenges in 2025, with sharp sales drops in China and Europe, margin pressures, and shifting growth targets.

Tesla Has a Demand Problem; The Stock is Dropping 

Tesla’s growth faces major hurdles in 2025 after its first annual decline in deliveries. Sales are plunging in key markets like China and Europe, while margins remain under pressure. Optimism around r

March 07, 2025
Stock market data with AI and crypto trends highlighted. I/O Fund provides institutional-grade stock analysis, offering insights on AI, semiconductors, and Bitcoin. Stay ahead with expert research and real-time trade transparency.

I/O Fund’s Top 10 of 2024

The digital world is overloaded with noise—millions of posts, comments, and messages flood the internet every minute. For investors, this creates a challenge: filtering out distractions to focus on hi

March 06, 2025
newsletter

Sign up for Analysis on
the Best Tech Stocks

https://bethtechnology.cdn.prismic.io/bethtechnology/e0a8f1ff-95b9-432c-a819-369b491ce051_Logo_Final_Transparent_IOFUND.svg
The I/O Fund specializes in tech growth stocks and offers in-depth research for Premium Members. Investors get access to a transparent portfolio, a forum, webinars, and real-time trade notifications. Sign up for Premium.

We are on social networks


Copyright © 2010 - 2025