Barron’s Headline: Russian Cyberattack Risks Are Growing. This Stock Will Benefit.
By Jack Hough
Updated March 22, 2022 / Original March 18, 2022
As the Russian economy crumbles, state-linked hackers are likely to shift from ransomware crimes to attacks meant to maximize destruction and societal upheaval, the CEO of a top cybersecurity company tells me. Yes, that’s a bit like an umbrella salesman saying it’s getting cloudy. But in this case, the clouds really are dark gray rumblers, and more to the point for investors, umbrella sales are shooting higher.
This was already happening, of course. The rise of cloud computing ballooned the number of devices linked to company and government networks—the “attack surface,” as cybercops call it. The pandemic turned homes into millions of new worksites. Not all workers were the picture of digital hygiene—if mine were bodily hygiene, I fear I’d have been the guy who gets his own car on the train. I’m working on it, and meanwhile, cybersecurity spending will rise to $172 billion this year from $155 billion last year and $137 billion the year before, according to tech researcher Gartner.
Palo Alto Networks (ticker: PANW) is growing much faster than that: Revenue increased 30% in its most recent quarter. Four years ago, the company was best known for its advanced firewall—a system that monitors and controls data traffic. It hired Nikesh Arora as CEO, who brought business and deal-making savvy from his past work at Google and SoftBank Group , but not much cybersecurity experience. His assessment was that the industry had too many companies selling too many tools, and that analysts at customers’ security operations centers, or SOCs, were spending too much time handling routine alerts.