With artificial intelligence becoming increasingly ingrained in our daily lives, can the innovation pick out the best cybersecurity stocks for robust returns? I’m eager to find out!
Heading over to ChatGPT, I asked the digital intelligence platform to provide me with cybersecurity stocks that have “serious upside potential,” mentioning the 10X target. Given the limitations for AI stock predictions, I wasn’t caught off guard with its suggestions. If anything, I was a bit bored.
Nevertheless, I simply wanted an answer to my inquiry without attempting to shake it down until I heard something I wanted to hear; otherwise, what would be the point? With that in mind, let’s explore AI’s top choices for cybersecurity stocks with serious upside potential.
CrowdStrike (CRWD)
According to ChatGPT, CrowdStrike (NASDAQ:CRWD) is a leading provider of cloud-native endpoint security solutions. Further, its platform offers advanced threat protection, endpoint detection and response (EDR), and threat intelligence services to enterprises and organizations worldwide. Due to the rising frequency and sophistication of cyberattacks, CrowdStrike’s innovative approach could position CRWD stock for long-term growth.
Pressing the intelligent chatbot for more information, it stated that CrowdStrike enjoys a strong growth trajectory. Since its inception, it has consistently posted strong financial metrics and has expanded its market share. Looking at the numbers myself, it’s definitely onto something. Right now, CrowdStrike prints a 43.5% three-year revenue growth rate. That’s much better than most other cybersecurity stocks.
Now, the challenge that clouds CRWD is that while analysts rate shares a consensus strong buy, the average price target sits at $300.42. From the time of writing, the estimate implies a loss of more than 9%. That’s not surprising given the 90.2X forward earnings multiple.
However, the high-side price target lands at $375, implying over 13% upside. If by 10X returns you meant 1.10X, CRWD is your investment. Still, as a long-term idea, it’s not bad for AI stock predictions.
Zscaler (ZS)
I don’t fault ChatGPT for this idea one bit because how it could possibly know? But I wouldn’t necessarily shower Zscaler (NASDAQ:ZS) as a 10X opportunity. Why? Since the beginning of the year, ZS already gained over 19% of market value. In the past 52 weeks, it’s up over 90% or nearly double. That’s not a great recipe for buying low and selling high.
Still, ChatGPT remarks that it could be one of the top cybersecurity stocks due to its cloud security mechanisms. Per the chatbot, the company’s platform features a zero-trust security architecture. Via Zscaler’s website, zero trust represents a protocol that no entity should be trusted by default. Such a standard should prevent the weakest link from imposing vulnerabilities on the entire chain.
Looking at this particular context, the narrative becomes clear. With more businesses adopting cloud-based technologies, it’s vital to shore up any vulnerabilities. As well, remote work protocols could represent a nightmare for organizational security.
Analysts rate shares a strong buy. However, the average price target sits at $244.27, implying almost 4% downside from where I am. In fairness, though, the high-side target is $311, implying 23% upside. Again, that’s decent for AI stock predictions.
Palo Alto Networks (PANW)
To be quite blunt, I was nervous that ChatGPT would select Palo Alto Networks (NASDAQ:PANW). It wasn’t to the level of Milli Vanilli winning a Grammy or anything like that. Still, PANW stock carries the same disadvantage that Zscaler does, just worse. On a year-to-date basis, Palo Alto shares gained just under 27%. In the trailing year, the enterprise returned shareholders over 113%.
So, can the fire keep burning? It’s unfair to put this on ChatGPT. However, from a longer-term framework, Palo Alto’s comprehensive suite of cybersecurity solutions – including firewall, cloud security, endpoint protection and threat intelligence services – should help spark gradual upside interest. Let’s face it, nefarious actors won’t ever stop their activities. The only way cyberthreats cease is if the internet fails altogether. We don’t want that.
In that sense, PANW and the other top-tier ideas are permanently relevant cybersecurity stocks. As you might imagine, analysts also rate shares a strong buy. However, the average price target of $356.63 basically calls for 3% downside risk. However, the most optimistic target aims for $450, which would be about 23% up.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.