Cybersecurity Stocks in 2025: Uncovering Mispriced Opportunities Amid AI-Driven Growth and Market Catalysts

The cybersecurity sector has emerged as a critical battleground for investors in 2025, driven by structural shifts in digital infrastructure, the proliferation of AI, and the escalating cost of cybercrime. According to Berenberg, certain cybersecurity stocks-most notably Okta and SentinelOne-are being mispriced by the market despite robust revenue growth and margin expansion trajectories. This mispricing, coupled with a surge in demand for AI-integrated security solutions, presents compelling opportunities for investors seeking to capitalize on catalyst-driven rerating events.

Structural Growth Drivers: AI, Cloud, and Cybercrime Costs

The cybersecurity market is being reshaped by three key forces: cloud adoption, AI-driven threats, and the rising economic toll of cyberattacks. The cost of cybercrime is projected to exceed $10.5 trillion in 2025, a figure that underscores the urgency for organizations to bolster their defenses. Simultaneously, AI has become a dual-use technology, enabling both more sophisticated attacks and advanced threat detection systems. As a result, companies are rethinking their security strategies, accelerating spending on AI-powered tools and cloud-based solutions.

Public cybersecurity companies now represent over $500 billion in market capitalization, with global cybersecurity spending expected to surpass $270 billion in 2025 according to Sapphire Ntures. Analysts at Wedbush note that AI tailwinds will continue to fuel sector growth, particularly in startups integrating machine learning into threat intelligence and endpoint protection as reported by Cybersecurity Ventures.

Market Mispricing: Okta and SentinelOne as Case Studies

Despite these tailwinds, some cybersecurity stocks remain undervalued. Berenberg highlights Okta and SentinelOne as prime examples of mispriced opportunities. Okta, a leader in identity management, has demonstrated low-double-digit revenue growth and margin expansion but trades at trough multiples, with a price-to-earnings (P/E) ratio that fails to reflect its market leadership as revealed in its Q3 2025 financial results. Similarly, SentinelOne, a platform transitioning to a more scalable business model, trades at a 5.16x price-to-sales ratio-well below the 8.79x average for its peers according to Wise Sheets data.

SentinelOne's financials reveal a mixed picture: while it reported 23% year-over-year revenue growth in Q3 2025, the company continues to operate at a net loss, with losses of $60.3 million and $340.5 million over the three- and nine-month periods ending October 31, 2025. Its trailing-twelve-month free cash flow margin improved to 5% from 1%, signaling progress, but profitability remains elusive as confirmed in the Q3 2025 results.

Catalysts for Rerating: Product Innovation and Strategic Alliances

The path to rerating for these stocks hinges on near-term catalysts. For SentinelOne, recent product launches and partnerships are pivotal. At AWS re:Invent 2025, the company announced integrations with AWS Security Hub and Amazon CloudWatch, streamlining data flow and enhancing visibility across cloud and endpoint attack surfaces. Additionally, SentinelOne launched the Purple AI MCP Server and Observo AI data pipeline on AWS Marketplace, democratizing access to its AI-driven tools as detailed in the same announcement.

Strategic alliances are also accelerating growth. SentinelOne's partnership with Rilian Technologies to expand AI-powered cybersecurity services in the Middle East targets a region grappling with evolving threats and stringent regulatory demands. Meanwhile, Okta's recent collaborations, including expanded identity solutions for enterprise clients, position it to capitalize on the shift to hybrid work environments.

For both companies, AI is a central differentiator. SentinelOne's integration of Observo AI into its Singularity platform enhances threat detection, while Okta's focus on identity governance aligns with the growing need for secure access in decentralized digital ecosystems. These innovations, coupled with improving financial metrics, could drive a re-rating as the market re-evaluates their long-term potential.

Conclusion: A Sector Poised for Rebalancing

The cybersecurity sector is at an inflection point, with mispriced stocks like Okta and SentinelOne offering asymmetric upside. As AI reshapes the threat landscape and cybercrime costs soar, companies that adapt their offerings to address these challenges-through product innovation, strategic partnerships, and margin discipline-stand to outperform. Investors who recognize these catalysts now may find themselves well-positioned for a sector-wide rerating in the months ahead.