Cybersecurity Vendors Expected To Be Resilient Amid Tariffs: Analyst

Palo Alto Networks, CrowdStrike and Zscaler are among the companies that will be more insulated against the Trump administration’s tariff policies, according to Wedbush Securities’ Daniel Ives.

Cybersecurity vendors such as Palo Alto Networks, CrowdStrike and Zscaler are poised to be more insulated than some other tech players against the Trump administration’s tariff policies, a Wall Street analyst told investors Monday.

Some cybersecurity products such as on-premises firewalls do continue to be delivered on hardware that could be impacted by increased tariffs. But the security industry’s emphasis on software should enable many top vendors to be more resilient amid the White House’s trade policy upheaval, according to Wedbush Securities’ Daniel Ives.

[Related: ‘Confusion,’ ‘Uncertainty,’ ‘Pain’: Solution Providers Grapple With Trump’s Tariff Regime]

As a result, Ives pinpointed cybersecurity as a potential haven for stock investments, in a note to investors Monday.

“Cybersecurity names such as Palo Alto [Networks], Zscaler, CrowdStrike, Check Point, CyberArk will be defensive names where investors could rotate from semis to software to hunker down during this Category 5 storm and likely outperform other subsets of tech,” wrote Ives, managing director and senior equity research analyst at Wedbush.

CrowdStrike, for instance, offers a cybersecurity platform that is entirely cloud-based, while Zscaler provides only minimal functionality via hardware and Palo Alto Networks has significantly diversified its offerings beyond its next-generation firewalls business.

As of this writing Monday afternoon, Zscaler’s stock price was up 2.5 percent to $179.03 a share, while shares in CrowdStrike were down 0.4 percent to $320.22 a share. Other vendors mentioned by Ives were seeing stock price declines as of this writing, including CyberArk (down 0.7 percent), Palo Alto Networks (down 1.6 percent) and Check Point (down 1.9 percent).

Meanwhile, major vendors in the broader IT space will have some protection against the impacts of new tariffs, though not to the same degree as cybersecurity vendors, according to Ives.

“Well positioned software names like IBM, Microsoft, Oracle, ServiceNow, Salesforce will be more insulated to some of the cost inputs (vs. chip/hardware names) but the worry is around growth destruction and enterprise uncertainty causing massive deal slippage,” he wrote in the note to investors.