In the early hours of July 19, 2024, cybersecurity company CrowdStrike (CRWD) inadvertently released a faulty software update that rendered over 8.5 million PCs inoperable. This incident triggered significant disruptions across various sectors, including banking, airlines, and health care, leading to a sharp decline in CrowdStrike’s stock, which plummeted more than 20% over the next two trading days. The event underscored the critical role of dependable cybersecurity solutions and highlighted the potential volatility inherent in cybersecurity stocks.
Cybersecurity stocks refer to shares of publicly traded companies that specialize in protecting computer systems from digital threats. While companies like CrowdStrike, Fortinet, and Palo Alto Networks focus exclusively on cybersecurity, others such as Datadog, Cisco, Broadcom, and Dell offer cybersecurity services alongside a range of diversified technological products.
The impact of major technical failures and cyberattacks on cybersecurity stocks is not straightforward, according to Roosevelt Bowman, an investment strategist at Bernstein Private Wealth Management. “It’s not often that you see a single event ‘doom’ a company,” Bowman stated. However, he identified two significant ways through which adverse events can negatively influence a stock’s long-term outlook. The first occurs when such incidents lead to a downward revision of a company’s future earnings, making the stock appear overvalued at its current price. The second, more concerning scenario arises if a company experiences “subsequent failures.” While CrowdStrike has faced minor outages before, nothing has matched the severity of the July 19 incident. The company’s ability to restore its reputation remains uncertain.
The fallout from the CrowdStrike incident has raised questions about investor sentiment towards cybersecurity stocks. As of March 2026, a review of the Nasdaq CTA Cybersecurity Index reveals the seven best-performing stocks traded on major U.S. exchanges, ranked by their one-year performance. Leading this group is Broadcom Inc (AVGO), which posted an impressive 67.87% increase. Following closely are Netscout Systems Inc (NTCT) with 37.03%, Leidos Holdings Inc (LDOS) at 36.63%, and Cloudflare Inc (NET) with 28.04%. Other notable performers include Cisco Systems Inc (CSCO) at 26.45%, Akamai Technologies Inc (AKAM) at 25.38%, and Radware (RDWR) with 8.80% gains.
Investors keen to engage with cybersecurity stocks should consider the increase in consumer data that necessitates robust protection against threats. Bowman noted that the shift from traditional in-person shopping to online transactions over the past decade has created ample opportunities within the industry. To invest in cybersecurity stocks, individuals will need a brokerage account, allowing them to purchase either individual cybersecurity stocks or invest in cybersecurity exchange-traded funds (ETFs).
Currently, very few cybersecurity ETFs boast at least $500 million in assets. Among them, the Amplify Cybersecurity ETF (HACK) reported a modest one-year performance of 0.29%. These ETFs provide investors with the advantage of gaining exposure to a diversified portfolio of cybersecurity stocks through a single investment, but it is essential for potential buyers to conduct thorough research on fees and holdings to ensure alignment with their investment goals.
The July incident involving CrowdStrike serves as a reminder of the delicate balance between technological advancement and responsibility in cybersecurity. While the market remains volatile, the increasing digitization of services indicates a persistent demand for effective cybersecurity solutions. As the landscape evolves, both investors and consumers will need to remain vigilant about the capabilities and reliability of the cybersecurity firms they choose to engage with.
See also
SISA CEO: Effective AI Use Can Deter Cyberattacks Amid Rising Threats
FAI Seeks Research Fellow in Cybersecurity & AI Policy with $130K Salary and Benefits
AI Agents Revolutionize Cybersecurity: Dual-Use Risks and Innovations Discussed on Bloomberg Podcast
Bitdefender Reveals APT36’s AI-Driven “Vibeware” Strategy Flooding South Asia with Malware
Bold Secures $40M Funding to Revolutionize AI-Powered Endpoint Protection
