Here are the hottest cybersecurity stocks as the Iran conflict rages

By Philip van Doorn and Tomi Kilgore

Consultants at Palo Alto Networks see a likelihood of attacks on information networks by hackers allied with Iran's government

Many cybersecurity stocks have been lifted this week. Consultants at Palo Alto Networks are concerned about the threat of cyberattacks against government networks by "cyber proxies" allied with Iran's government.

Shares of cybersecurity-software companies have been on a roll this week, with investors reacting to the heightened threat of digital warfare as the Iran conflict escalates.

Below is a list of this week's best performers in this industry group that also includes projected sales growth and valuation measures.

Unit 42 - Palo Alto Networks' (PANW) consulting team focused on security threats - published on Monday a threat assessment indicating that there has been "an escalation in cyberattacks" from Iran-affiliated activists outside of the country.

Attacks by state-sponsored actors within Iran are less likely, as the U.S. and Israel's attacks have likely hindered the ability of "state-aligned threat actors to coordinate and execute sophisticated cyberattacks in the near term," the Unit 42 report said. Since the conflict began, internet connectivity in the country has dropped significantly, to between 1% and 4% of prior connectivity, the report stated.

But the analysts also expect "low- to medium-sophistication disruptions (for example, distributed denial of service and hack and leak campaigns)" by geographically disbursed "operators and affiliated cyber proxies" allied with Iran's government.

And as the U.S. Cybersecurity and Infrastructure Security Agency noted, the Iranian government has routinely sponsored attacks on U.S. networks and internet-connected devices, particularly those that have been poorly secured. So investors have good reason to lean into companies that can help reduce that threat.

Since the Iran conflict started last weekend, the First Trust Nasdaq Cybersecurity ETF CIBR has climbed 2.9% this week, while the S&P 500 Index SPX is little changed. So far this year, the ETF is still down about 9% amid worries about the business threat from artificial intelligence, while the S&P 500 has gained 0.5%.

The CIBR ETF holds shares in 32 companies, as it tracks the Nasdaq CTA Cybersecurity Index. This global index includes companies in the technology and industrial sectors that are "primarily involved in the building, implementation and management of security protocols applied to private and public networks, computers and mobile devices in order to provide protection of the integrity of data and network operations," according to Nasdaq.

So here is a list of the 10 holdings of CIBR that were up the most this week through midday trading on Wednesday. The table also includes projected compound annual growth rates (CAGR) for sales from 2025 through 2027; these projections are based on consensus estimates among analysts working for brokerage and research firms polled by LSEG. The projections are based on calendar-year revenue estimates, as adjusted by LSEG for companies whose fiscal years don't match the calendar. In comparison, companies in the S&P 500 as a weighted group are expected to show a revenue CAGR of 4.8% over the next two years.

   Company                  Price change from Feb. 27 through midday March 4  2026 price change  2-year projected sales CAGR through 2027  Forward P/E 
   Cloudflare                                                           7.9%              -5.7%                                     28.3%        146.3 
   Rapid7                                                               7.4%             -56.1%                                     -0.8%          4.2 
   A10 Networks                                                         7.0%              16.4%                                     10.5%         19.5 
   Palo Alto Networks                                                   6.9%             -13.6%                                     20.8%         40.3 
   CrowdStrike Holdings                                                 6.8%             -15.3%                                     22.2%         77.0 
   Zscaler                                                              6.6%             -30.3%                                     20.4%         34.9 
   Qualys                                                               6.4%             -26.0%                                      7.5%         12.9 
   Tenable Holdings                                                     5.7%             -13.6%                                      7.1%         10.3 
   Fortinet                                                             5.3%               4.8%                                     11.1%         26.3 
   Radware                                                              4.6%               0.5%                                      8.5%         20.9 
                                                                                                                                       Source: FactSet 

(Click on the tickers for more about each company.)

Read: A detailed guide to the information available on the MarketWatch quote page

CrowdStrike's stock also got a boost this week, after the company on Tuesday reported fiscal fourth-quarter revenue that rose above expectations and provided an upbeat full-year outlook.

All of these companies are based in the U.S. except for Radware (RDWR), which is based in Israel.

The table includes forward price-to-earnings ratios, which are prices divided by consensus earnings-per-share estimates among analysts polled by LSEG. They compare to weighted forward P/E ratios of 21.8 for the S&P 500, 24.2 for the index's information-technology sector XX:SP500.45 and 26.3 for its industrials sector XX:SP500.20.

Some of the P/E ratios are very high, underscoring how revenue growth has been the driver for many of these stocks over the long term.

-Philip van Doorn -Tomi Kilgore

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03-04-26 1550ET