Cloudflare and CyberArk See Significant Gains Following Cyberattack Concerns
Shares of leading cybersecurity firms Cloudflare (NET) and CyberArk (CYBR) saw impressive gains this week, fueled by escalating concerns over Chinese hacking incidents, which are expected to drive an increase in cybersecurity spending. Cloudflare’s stock surged by 6.6%, reaching $114.77, while CyberArk’s Cybersecurity Stocks climbed 2.2%, hitting $340.63.
Cybersecurity Stocks Upgrades Reflect Growing Cybersecurity Demand
Goldman Sachs’ recent upgrade of Cloudflare to a “buy” from “sell” contributed to the firm’s stock surge. The investment bank’s report cited the “Salt Typhoon” Chinese hacking incident, which targeted U.S. telecom companies, as a primary factor that will likely spur further demand for cybersecurity services. Goldman Sachs analyst Gabriela Borges emphasized Cloudflare’s effective go-to-market strategy, predicting that the company’s sales and marketing productivity will continue to improve, bolstered by a recent shift in focus to enterprise platform sales.
Cloudflare’s positive performance was also fueled by its strategic hiring of Chirantan “C.J.” Desai, a former ServiceNow executive, who joined as the president of product and engineering in October. Analysts are optimistic that this move will strengthen the company’s ability to address emerging cybersecurity challenges.
CyberArk Benefits from Additional Cyberattack Reports
Meanwhile, CyberArk’s strong performance was also driven by external factors, including another Chinese hacking incident involving rival BeyondTrust. Morgan Stanley analyst Hamza Fodderwala highlighted that hackers, possibly linked to the Chinese government, breached several Treasury Department workstations in late December. The attackers gained access through vulnerabilities in BeyondTrust’s third-party security systems. Since CyberArk competes with BeyondTrust in the Privileged Access Management sector, Fodderwala noted that CyberArk could see increased demand for its services as a result.
2024 Performance and Market Trends
Both companies are part of a broader trend of strong cybersecurity stock performances. In 2024, Cloudflare experienced a 36% increase in stock value, while CyberArk’s Cybersecurity Stocks rose by 53%. Other cybersecurity companies also performed well, with Fortinet (FTNT) rising by 63%, Palo Alto Networks (PANW) gaining 26%, and CrowdStrike Holdings (CRWD) advancing by 38%. This growth contrasts with the broader S&P 500, which rose about 24% in 2024, underscoring the growing significance of cybersecurity in an increasingly digital world.
The recent Chinese cyberattacks have heightened global awareness about vulnerabilities in digital infrastructure, pushing companies to invest more heavily in robust cybersecurity solutions. With Cloudflare and CyberArk standing out in this space, analysts continue to keep a close watch on their performance in the coming year.
