CrowdStrike(NASDAQ: CRWD ) and Palo Alto Networks(NASDAQ: PANW) are two of the world’s largest cyber security companies. Both stocks have generated massive multi-bagger gains since their public debut as the cybersecurity market expanded.
But over the past 12 months, CrowdStrike’s stock is up 33%, while Palo Alto’s stock is down 4%. Let’s see why the former did the latter, and if it will remain the best cybersecurity stock to buy for the rest of 2026.
Will AI create the world’s first trillionaire? Our team just published a report on a little-known company, called “Essential Dependency” that provides critical technology to both Nvidia and Intel. Continue »
Image source: Getty Images.
Palo Alto Networks divides its ecosystem into three main platforms: Strata, for its legacy network services; Prisma, for its cloud-based services; and Cortex, for its AI-powered threat detection services. Much of its recent growth has been driven by Prisma and Cortex, which it collectively refers to as its “next-generation security” services. It recently acquired CyberArk, a leader in privileged access management (PAM) services, for $25 billion.
Palo Alto’s legacy services still need to be replaced in the field through expensive, maintenance and equipment that is difficult to scale as the company grows. CrowdStrike addresses these issues with Falcon, its cloud-native endpoint security platform that doesn’t require on-premises devices and locks customers into sticky recurring subscriptions. Its customers start with a few trial cloud modules and add more to access additional security features.
From fiscal 2020 to fiscal 2025 (which ended last July), Palo Alto’s revenue grew at a 22% CAGR. It also became profitable under Generally Accepted Accounting Principles (GAAP) in fiscal 2023 and grew its net income at a CAGR of 61% over the next two years.
From fiscal 2025 to fiscal 2028, analysts expect Palo Alto’s revenue and EPS to grow at CAGRs of 19% and 22%, respectively. This growth should be driven by its NGS services, the recent acquisition of CyberArk, and its “platforming” strategy of bundling other superior services into its core platforms to move companies away from smaller cybersecurity firms.
From fiscal 2021 to fiscal 2026 (which ended this January), CrowdStrike’s revenue grew at a 41% CAGR. However, it is still not useful by GAAP measures. It grew rapidly as its cloud-native services drove more companies away from legacy cybersecurity providers, and it increased revenue per customer by selling more models.
From fiscal 2026 to fiscal 2029, analysts expect CrowdStrike’s revenue to grow at a CAGR of 22%. They also expect it to become profitable in fiscal 2027, and grow its net income at a CAGR of 100% over the next two years. Its top-line growth should be driven by the development of consumption-based “Falcon Flex” plans (which don’t require hard subscriptions or module purchases) and the use of generative AI tools to streamline its threat detection services. Its profitability should also improve as it reduces stock-based compensation costs.
Both companies are well-positioned to benefit from the secular expansion of the cybersecurity market, which is generally insulated from macro overhead because companies won’t shut down their digital defenses just to save a few bucks. According to Fortune Business Insights, the global cyber security market can still expand at a CAGR of 13.8% from 2026 to 2034.
However, both companies could eventually face tough competition from diverse tech giants Microsoft(NASDAQ: MSFT )which bundles more endpoint security services into its software, and AI-based cybersecurity companies such as SentinelOne(NYSE: S ).
Palo Alto trades at 45 times its forward-adjusted (non-GAAP) earnings, while CrowdStrike has a much higher forward-adjusted price-to-earnings ratio of 91. CrowdStrike is growing only slightly faster than Palo Alto, but its cloud-native approach is driving investor growth.
Both of these stocks are still reliable cybersecurity plays. But if I had to choose between the two, I’d take Palo Alto because it trades at a more reasonable price in this volatile market.
Before you buy stock in Palo Alto Networks, consider this:
of the Motley Fool Stock Advisor The analyst team identified only what they believed 10 best stocks For investors to buy now… and Palo Alto Networks was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix This list was created on December 17, 2004 … If you invested $1,000 at the time of our recommendation, You will have $508,607or when Nvidia This list was created on April 15, 2005 … If you invested $1,000 at the time of our recommendation, You will have $1,122,746!*
Now, this is significant Stock consultant The total average return is 933% – Outperformed the market by 188% for the S&P 500. Don’t miss the latest Top 10 list, available with Stock consultantand join an investment community created by individual investors for individual investors.
View 10 Stocks »
* Stock Advisor returns to March 13, 2026.
Leo Sun has no position in any of the listed stocks. The Motley Fool has and recommends positions in CrowdStrike, Microsoft, and SentinelOne. See more information about The Motley Fool page on Facebook The Motley Fool has a disclosure policy.
CrowdStrike vs Palo Alto Networks: Which Cybersecurity Stock Will Win 2026? Originally published by Motley Fool
