Investing.com -- Stephens initiated coverage of the cybersecurity sector, assigning "Overweight" ratings to CyberArk, Zscaler (NASDAQ:ZS), CrowdStrike (NASDAQ:CRWD), and SentinelOne (NYSE:S). The firm named CyberArk its "Best Idea," citing strong positioning in identity security.

In periods of macro uncertainty, cybersecurity tends to be viewed as being more resilient

Stephens highlighted the growing sophistication and volume of cyber threats, which are accelerating due to cloud adoption, remote work, and expanding attack surfaces.

The firm believes cybersecurity remains a large and attractive market with significant long-term demand.

The report noted that enterprises are increasingly consolidating cybersecurity vendors, favoring larger strategic platform providers. Companies with scale are expected to benefit the most from this trend.

CyberArk was highlighted as a leader in Identity Security space, benefiting from the growing complexity of securing identities across distributed users and applications.

Enterprises are shifting from on-premise network security appliances to cloud-based solutions, such as Secure Access Service Edge (SASE) and Zero Trust models

CrowdStrike and Palo Alto Networks (NASDAQ:PANW) were cited as strong players in Cloud Security which is highly competitive but rapidly expanding segment.

Stephens sees data security and security operations platforms as undergoing major upgrades, driven by AI and cloud-based solutions.

The firm believes these shifts will continue to fuel demand for next-generation cybersecurity solutions, with companies positioned in high-growth segments poised to outperform.

Cybersecurity as a group has outperformed YTD compared to a 4.9% decline in the S&P 500 and a 10% decline in the IGV Software Index.

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