Cybersecurity’s Best of Breed

The Evolution of Market Darlings in a Digital Arms Race

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Over the past three years, the landscape of cybersecurity investing has evolved at warp speed. As cyber threats become more sophisticated, so too have the companies tasked with protecting global infrastructure, corporations, and governments. The market has responded, rewarding a handful of standout firms with surging stock prices, sticky customer bases, and sky-high expectations.

But here's the thing: this isn’t a rising tide lifting all boats. In cybersecurity, only the strongest swimmers survive, and even fewer thrive. If you’re applying a “Best of Breed” filter, you’re looking for elite companies that don’t just sell cyber tools, they embody the 4 D’s of true digital defense: Deter, Detect, Delay, and Defend.

And that list? It's tighter than a bank vault.

Let’s break down the current stars and rising contenders, separating narrative hype from operational excellence.

The Two Juggernauts: CrowdStrike and Palo Alto Networks

CrowdStrike (CRWD)

Think of CrowdStrike as the Navy SEALs of endpoint security. Its Falcon platform leverages AI to detect and stop threats before they can do real damage, often in real-time. CrowdStrike doesn’t just respond to breaches; it predicts them. That's deterrence and detection baked into the business model.

Over the last three years, CrowdStrike has shifted from promising upstart to dominant force, with consistent revenue growth, increasing gross margins, and customer retention that would make Apple jealous. It’s also pivoted from pure endpoint protection to full Extended Detection and Response, giving customers a unified view of their threat landscape.

Wall Street has noticed. CRWD is one of the few cybersecurity stocks trading near all-time highs in 2025. Best of Breed? Check.

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Palo Alto Networks (PANW)

Palo Alto used to be a box-and-hardware firewall company. Not anymore. CEO Nikesh Arora transformed this legacy titan into a cloud-first, AI-enhanced security platform through smart acquisitions and internal innovation. PANW now offers best-in-class firewalls, SASE (Secure Access Service Edge), and threat intelligence, spanning network, cloud, and endpoint security.

They Detect, Delay, and Defend with precision, which has translated into exceptional free cash flow and institutional love. You want a company with a long runway, recurring revenue, and proven leadership? Palo Alto belongs in your core cybersecurity allocation.

The chart below shows a bounce pattern for Palo Alto however it is a real player in the cybersecurity space.

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The Next Generation: Zscaler, Sentinel One, Okta

Zscaler (ZS)

Zscaler took a different route: eliminate the concept of traditional perimeter-based security altogether. Their Zero Trust Exchange acts like a bouncer at the door of every single digital interaction, whether inside or outside the network.

The market responded with explosive enthusiasm early on, but ZS hit growing pains, valuation stretched, customer onboarding got rocky, and execution slipped. Still, Zscaler has corrected course, with renewed focus on enterprise deals and deeper integrations. Investors with patience may be rewarded.

Zscaler excels at Deterring lateral movement once a breach happens—a modern must-have in hybrid work environments.

Sentinel One (S)

Sentinel One was the cool kid on the block in cybersecurity with their IPO in 2021. Their AI-based approach to endpoint protection made them a direct threat to CrowdStrike. The tech is sound, but the business model still has something to prove. Inconsistent earnings, ballooning costs, and leadership turnover have made investors skittish.

They Detect well but still need to show they can Delay and Defend across a broader platform. Keep an eye on their movements and platform expansion, there’s potential, but it's speculative compared to the proven giants.

OKTA (OKTA)

Identity is everything in a digital world, and Okta used to own that space. But a series of high-profile breaches and post-pandemic slowing caused their shine to wear off.

Okta is a classic case of a former Best of Breed under review. Still, they play a key role in Deterring unauthorized access. Their Identity Governance and access tools are still best-in-class, but execution must improve. If they can regain trust and deliver consistent numbers, Okta could return to its former glory.

Investor Takeaway. Quality over Quantity in Cybersecurity

This isn’t a category to invest in blindly. High growth can be mistaken for high quality, and hype always outruns fundamentals in short bursts.

Stick to the 4 D’s framework—Deter, Detect, Delay, Defend, and prioritize the ones that are winners of the future. Do they integrate across multiple security layers and show durable revenue growth with margin expansion. They also must maintain high net retention and low churn and show as leaders in industry peer reviews.

As of July 2025, CrowdStrike and Palo Alto remain your go-to generals. Zscaler and Okta are rebuilding credibility. Sentinel One is promising, but still in the show-me phase.

In cybersecurity investing, it pays to back the best. Because when the next breach hits, and it will, everyone suddenly cares who’s guarding the gates.

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