In the early morning hours of July 19, 2024, a software update from cybersecurity firm CrowdStrike (CRWD) went awry — disabling over 8.5 million PCs worldwide. The resulting outage disrupted critical sectors including banking, airlines, and health care, triggering global headlines and a sharp selloff in CrowdStrike shares, which plunged more than 20% over the next two trading days.
While the chaos drew attention to the fragility of digital infrastructure, it also underscored the growing demand — and risk — tied to cybersecurity companies. So how should investors think about this fast-moving sector?
What Are Cybersecurity Stocks?
Cybersecurity stocks represent companies that protect digital systems and data from cyber threats like hacking, ransomware, and data breaches.
They fall into two main categories:
-
Pure-play cybersecurity firms like CrowdStrike, Fortinet (FTNT), and Palo Alto Networks (PANW), which focus exclusively on digital security.
-
Diversified tech companies such as Cisco (CSCO), Broadcom (AVGO), Datadog (DDOG), and Dell (DELL), which include cybersecurity as part of a broader product offering.
Do Glitches and Outages Hurt Cybersecurity Stocks?
Not always — but they can.
According to Roosevelt Bowman, investment strategist at Bernstein Private Wealth Management, single events like CrowdStrike’s July outage rarely “doom” a company. However, there are two key ways that a major technical failure can drag down long-term stock performance:
-
Earnings Expectations Drop: If a company’s future earnings are impacted, its stock may begin to look overpriced — triggering a selloff.
-
Reputation Damage or Repeat Failures: Investors may lose confidence if issues persist or expose deeper flaws in a company’s technology or leadership.
In CrowdStrike’s case, the July 19 incident was unprecedented in scope, although the company has had smaller issues in the past. Its future performance may hinge on whether it can restore confidence in its reliability.
Top Cybersecurity Stocks (as of September 2025)
Despite occasional setbacks, many cybersecurity firms have delivered strong returns over the past year. Below are the top-performing cybersecurity stocks from the Nasdaq CTA Cybersecurity Index, ranked by 1-year performance:
| Ticker | Company | 1-Year Performance |
|---|---|---|
| NET | Cloudflare Inc | 177.95% |
| AVGO | Broadcom Inc | 129.01% |
| CYBR | CyberArk Software Ltd | 73.80% |
| ZS | Zscaler Inc | 73.61% |
| BB | BlackBerry Ltd | 67.38% |
| CRWD | CrowdStrike Holdings Inc | 67.19% |
| FFIV | F5 Inc | 59.28% |
Data Source: Finviz (as of Sept. 9, 2025). Performance data is for informational purposes only.
How to Invest in Cybersecurity: Stocks vs. ETFs
Cybersecurity remains a high-growth sector, thanks to the increasing amount of personal and business data being stored online. Bowman notes that the rise of e-commerce, remote work, and digital services has created long-term demand for digital protection.
To invest in cybersecurity, you have two main options:
✅ Individual Stocks
Buying individual companies like Cloudflare or CrowdStrike allows you to target specific businesses — but also exposes you to company-specific risk.
✅ Cybersecurity ETFs
Exchange-traded funds (ETFs) offer instant diversification by bundling many cybersecurity companies into a single investment. Below are the top cybersecurity ETFs with at least $500 million in assets, ranked by 1-year return:
| Ticker | ETF Name | 1-Year Performance |
|---|---|---|
| HACK | Amplify Cybersecurity ETF | 33.08% |
| CIBR | First Trust NASDAQ Cybersecurity ETF | 31.09% |
| BUG | Global X Cybersecurity ETF | 16.72% |
| IHAK | iShares Cybersecurity & Tech ETF | 10.02% |
Data Source: Finviz (as of Sept. 9, 2025). Past performance does not guarantee future results.
Before You Buy: Do Your Homework
While ETFs offer a simplified entry point, it’s still important to:
-
Review the ETF’s top holdings
-
Check expense ratios and fees
-
Compare long-term performance and risk profile
The cybersecurity sector may be volatile — but it also presents significant upside for long-term investors who can tolerate risk and navigate occasional bumps like the CrowdStrike outage.
Bottom Line
Cybersecurity is an essential — and fast-evolving — part of our digital lives. For investors, the sector offers strong growth potential, but it’s not without risk. Events like the July 2024 CrowdStrike outage are reminders that even security companies need to secure their own systems.
Whether you invest through individual stocks or ETFs, always prioritize research, diversification, and risk management.
Want more market insights like this? Follow CreditVana for trusted financial news, tips, and investment guides tailored to your goals.
