These three cybersecurity stocks are hot on the industry’s latest trends

A batch of companies stood out at a recent cybersecurity industry conference covering the latest trends, according to a new research report from US investment bank William Blair.

The RSA Conference is a leading information security conference that recently took place at San Francisco’s Moscone Centre, attended by 26,000 people including over 600 speakers and more than 400 industry exhibitors.

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“We continue to observe the cybersecurity space morphing to adjust to modern cyber threats, as there is still no single approach that is a silver bullet for cyber protection,” William Blair analyst Jonathan Ho wrote.

“Our sense is that automation and integration continued to take a more prominent role in this year’s conference given challenges around skills and worker shortages as well as increasing complexity.”

Palo Alto Networks (PANW) stock price

Incorporated in 2005, Santa Clara, California-based Palo Alto Networks makes data networking equipment such as firewalls and offers cybersecurity-related products and services covering internal networks and the cloud.

Palo Alto’s founder and chief technical security officer Nir Zuk gave a keynote speech at the conference discussing the concept of a self-driving SOC (Security Operations Centre).

Palo Alto Networks

A Security Operations Centre (SOC) collects a large organisation’s IT infrastructure data in order to give IT security professionals a better handle on what’s happening with their systems.

Enhanced automation

Zuk put forward the case that the level of automation needs to be significantly enhanced within SOCs, which are already flooded by a plethora of data and alerts.

Within its Next Generation Security business, Palo Alto offers Cortex - a suite of AI tools that can be used to deliver detection and response across all data sources.

“As [Palo Alto’s Zuk] stated, security analysts can determine how a breach occurred and what attackers did with captured data, but they do it in days, weeks, or months. If the process were automated to a much more significant way, then that time frame could be shortened, with the goal of shortening the breach determination time to be real time in nature,” William Blair’s Ho wrote.

VMware (VMW) stock price

VMware (VMW) is a US technology company engaged in cloud computing and IT infrastructure virtualisation software. The company was spun-off from Dell Technologies (DELL) in 2021 and earlier this year, Broadcom (AVGO) made a $61bn (£50bn, €58bn) offer for the company.

Broadcom

William Blair analysts attended a keynote session led by VMware that put forth the view that lateral security is the newest perimeter – and product area – in cybersecurity.

Understanding security perimeters

Firewalls, which separated internal and external networks, were considered the original perimeter which then moved on to endpoint security as the industry matured. An endpoint is any interface between a user and a network, such as a desktop computer, laptop or smartphone.  

With cloud computing, perimeters became much more nebulous as it was difficult to pinpoint where the data of organizations was stored and where their applications were running.

Modern cybersecurity methods now encompass extended detection and response (known in the industry as XDR): data from various elements within an organization’s IT infrastructure is gathered and sifted to find the cause of suspicious activity.

The newest cybersecurity perimeter is lateral security, which creates an end-to-end view of how users interact with applications.

“In this concept, telemetry involves data from users, devices, networks traversed, and applications, but applications are not treated as monolithic concepts. Instead, applications are broken down in terms of the services that they use, which includes container-based and segmentation-based workloads in the cloud,” the William Blair analyst wrote.

No-Code/Low-Code

Another session covered the emerging concept of “no-code/low-code” tools and how secure the applications created by these tools were. Research firm Gartner predicts that 65% of software development will be low-code in nature by 2024.

Since these tools are aimed at non-technical users (code development becomes so easy that virtually anyone can do it), there are fears that an application’s business case – and how soon it can be released – would take precedence over how secure the application might be.

William Blair’s Jonathan Ho drew a distinction between general-purpose no-code/low-code and that written by security firms such as Okta (OKTA).

Okta (OKTA) stock price

Founded in 2009 by two former Salesforce.com (CRM) employees, San Francisco-headquartered Okta offers cloud-based identity and access management solutions to businesses, government agencies and educational establishments in the US and abroad.

Okta

“In our view, given that Okta is a security vendor, we view this type of no-code/low-code, which is generally used to navigate data and to create security workflows on data, as being much more security-compliant, because of the very nature of the code being developed by a security vendor,” the William Blair analyst wrote.

In March, Okta's stock tumbled when it revealed a security breach that was traced back to a sub-contractor.

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