The internet may have transformed almost every part of the world today. But it goes without saying, it has also created a wide range of other threats too, one of the most significant of which is cybercrime. But every cloud has a silver lining and, in this case, it has been the growth of the cybersecurity industry. Today a number of companies that specialise in this field have seen almost unprecedented levels of growth, in line with the increase in threats that they are protecting us from. So much so, in fact, that cybersecurity stocks are fast becoming an investors’ favourite with many seeing double digit percentage increases in their value annually.
To appreciate why these companies are doing so well, and therefore why they’re so attractive to investors, one way is to look at the statistics to get a true feel of the size and the scope of the cybersecurity problem.
The line-up of companies that have been affected also tells its own story. For example, through using Amazon’s Cloud service, Facebook (News - Alert) exposed a staggering 540 million users’ identities to hackers. Equifax, the global credit ratings agency, suffered a data breach which gave access to the personal details of 147 million customers. This situation cost an estimated $439 million to remedy and other similar attacks have cost other companies far more.
But it isn’t just the expense of compensating customers and the fines that breaches may attract that make having first rate cybersecurity measures in place so important. That’s because, although companies do all they can to prevent news of an attack reaching the media, information leaks out. When it does it can’t but help damage the reputation of the organisation in question. And with customers likely to already be unhappy that their privacy has been compromised it could have very serious commercial consequences.
So, to take us back to where we began, the critical need for reliable protection has led to the rapid growth of cybersecurity companies who are just as appealing to investors as they are to the organisations needing protection.
Amongst the biggest names in the cyber-security field today are Palo Alto Networks, Fortinet (News - Alert) and Check Point. To just take the example of Palo Alto Networks, it’s seen a 150% growth since 2014 with an all time stock high of $254,88. Fortinet is even more impressive with a 211% growth over the same five year period and a market cap of over $13 billion.
Of course, to continue being so attractive to investors and end users alike, all cybersecurity companies are going to have to stay at least one step ahead of the hackers and other criminals.
Naturally, much of the work that cybersecurity companies do is kept very much under wraps. But there are strong indications that AI will start to play a far more important role. This is because as tech becomes more sophisticated, it will only be by using systems that can “think” for themselves that security will keep pace with the attackers.
So, it would seem that there are challenges and great opportunities ahead for the cybersecurity industry in general. As a result, anyone thinking of investing in the sector would do well to keep an eye on the organisations who seem to be out in front of the competition.