Investors will find strong opportunities in new cloud security companies, because companies often switch to cloud services, says Bloomberg. Okta, Zscaler and CrowdStrike, among others, are growing like crazy, and analysts suspect that this growth will continue for a while.
As companies continue to spend more on cloud-based security systems, cloud security companies are doing very well in the stock market. The value of Zscaler and Okta shares increased by 80 percent in 2019, while the value of CrowdStrike shares even doubled.
Analyst Nick Yako of Cowen states that the security industry is undergoing a transformation. “The security industry is in the midst of a massive transformation. We’re seeing security budgets migrate more and more to cloud-based solutions.”
According to IDC, security spending worldwide will increase by 9.4 percent compared to 2018, to 103.1 billion dollars. With increased computing power and real-time updates, many users opt for cloud services. By 2020, approximately 38 percent of global security budgets will be spent on cloud services, according to a study by Cowen. This compared to 18 percent in 2018.
Migration to the cloud driving unprecedented growth
Traditional security services have difficulty keeping up with the migration to the cloud. Alex Henderson, analyst at Needham, believes that on premise techniques are no longer sufficient. “You cannot store data on premise and expect to have enough information to really understand how cyber attacks spread and who the attackers are. (…) The fundamental driving force behind these companies is that they really provide better security.”
Okta is reportedly going to announce a revenue growth of 39 percent for the fiscal second quarter next Wednesday. CrowdStrike will announce its results on 5 September, Zscaler on 10 September. According to Bloomberg, the share prices of the companies are now so high that even some concerns arise on the stock market. With such growth in shares, there is a chance that unsustainable growth will be created, in other words, a bubble that eventually collapses.This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.