We recently compiled a list of the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Akamai Technologies, Inc. (NASDAQ:AKAM) stands against the other undervalued cybersecurity stocks.
With businesses facing a significantly complex cyber threat landscape, it is of utmost importance to stay ahead of trends in cybersecurity. Industry experts believe that, in 2025, the integration of AI in threat detection and acceleration in post-quantum encryption should define the landscape of the broader cybersecurity industry. Splashtop reported that the transition to a Zero-Trust framework demonstrates a significant shift in cybersecurity, emphasizing continuous verification and minimal access to enhance overall network security.
Global X Cybersecurity ETF saw an increase of more than 20% over the past year. What has led to this rally? Given the recent adoption of AI technology, market experts believe that the need for cybersecurity is significantly important. With several companies integrating GenAI into their operations, there has been a significant increase in cyberattacks. This led to increased demand for product offerings of cybersecurity companies.
Cybersecurity Industry- The Road Ahead
As per Fortune Business Insights, the global cybersecurity market size was pegged at US$172.24 billion in 2023. This market should grow from USD 193.73 billion in 2024 to USD 562.72 billion by 2032, demonstrating a CAGR of 14.3%. Furthermore, the US cyber security market should see strong growth, touching an estimated value of US$166.73 billion in 2032. This should stem from an increased number of e-commerce platforms. The strong adoption of enterprise security solutions in manufacturing, BFSI, and healthcare should fuel market growth up to 2032.
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Prevention of Cyberattacks
As per EIN Presswire, the quicker expansion of the Internet of Things (IoT) offers a significant opportunity for the broader cybersecurity market. As IoT devices—which range from smart home appliances to industrial sensors— become critical to business operations, there seems to be an increased requirement for effective cybersecurity measures. Several devices often lack strong security protocols. This leads to hacking, unauthorized access, and exploitation.
EIN Presswire added that, amidst these challenges, the cybersecurity industry has a unique opportunity to develop specialized solutions established to secure the IoT ecosystem effectively. This might consist of implementing advanced encryption protocols to protect data transmission, and developing device authentication mechanisms so that only authorized devices can connect to the network. Also, intrusion detection systems can be deployed tailored to monitor and protect against threats related to interconnected devices.
NGFWs (Next Generation Firewalls) protect against evolving practices that use AI to bypass traditional defences, as per Juniper Research. It added that the network layer is the most critical element of IoT networks to protect, with more than 45% of global cybersecurity spending inclined towards protecting the network layer in 2025.
Our Methodology
To list the 12 Most Undervalued Cybersecurity Stocks to Buy According to Hedge Funds, we sifted through numerous online rankings and combed through cybersecurity-focused ETFs, such as First Trust NASDAQ Cybersecurity ETF and Amplify Cybersecurity ETF. After getting an initial list of 25-30 stocks, we extracted the ones trading lower than the forward P/E of ~20.0x, as of November 20. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a person using a laptop with cloud solutions in the background.
Akamai Technologies, Inc. (NASDAQ:AKAM)
Forward P/E as of November 20: ~13.4x
Number of Hedge Fund Holders: 30
Akamai Technologies, Inc. (NASDAQ:AKAM) is a cybersecurity and cloud computing company, which powers and protects business online.
Wall Street analysts are optimistic about Akamai Technologies, Inc. (NASDAQ:AKAM)’s acquisition of application programming interface (API) security company, Noname Security. This demonstrates its strategic focus on expanding its security and compute offerings. This acquisition aligns with Akamai Technologies, Inc. (NASDAQ:AKAM)’s goal of strengthening its security portfolio and capitalizing on the growing demand for API protection.
Noname should accelerate Akamai Technologies, Inc. (NASDAQ:AKAM)’s ability to address growing customer demand and market requirements as the use of APIs continues to expand. Furthermore, it will be able to extend protection throughout API traffic locations, irrespective of business, integration, or deployment requirements that the customers might have. Akamai Technologies, Inc. (NASDAQ:AKAM) will be able to gain greater scale with Noname’s additional sales and marketing resources, and well-established channel and alliance relationships.
Akamai Technologies, Inc. (NASDAQ:AKAM)’s previously announced acquisition of Guardicore enhanced Akamai’s Zero Trust security capabilities. Therefore, this acquisition positioned Akamai Technologies, Inc. (NASDAQ:AKAM) to address the evolving needs of enterprise customers amidst an increasingly distributed computing environment. Despite the near-term challenges, the company’s management remains optimistic about its long-term prospects, primarily in the Security and Compute segments. With the cybersecurity market expanding rapidly, Akamai Technologies, Inc. (NASDAQ:AKAM)’s established reputation and comprehensive security portfolio place it well to tap a significant share.
Tigress Financial reiterated a “Strong buy” rating, issuing a $140.00 target price on 29th August. Diamond Hill Capital, an investment management company, released its fourth-quarter 2023 investor letter. Here is what the fund said:
“Akamai Technologies, Inc. (NASDAQ:AKAM) is a legacy content delivery network (CDN) solutions provider which management has recently pivoted to enterprise and network security as well as distributed cloud computing. However, these markets are intensely competitive, and Akamai has yet to prove it can differentiate itself from cloud hyperscalers and best-of-breed security companies.”
Overall AKAM ranks 5th on our list of the most undervalued cybersecurity stocks to buy according to hedge funds. While we acknowledge the potential of AKAM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than AKAM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.