Bank of America has updated its outlook for several leading cybersecurity firms, raising price targets for Cloudflare, Palo Alto Networks, SentinelOne and CrowdStrike. The brokerage tied the changes to rising valuations in the cybersecurity industry, accelerating adoption of artificial intelligence and an improved long-term growth outlook for the companies involved.
Analysts at the firm said AI is increasing the volume of data that enterprises must manage, widening attack surfaces and adding complexity to security architectures. Those dynamics, the analysts argued, support persistent spending on security products and services and increase the strategic value of platforms that combine data, automation tools and AI-driven capabilities.
To reflect those trends, the brokerage raised the forward enterprise value-to-revenue and enterprise value-to-free-cash-flow multiples it applies when valuing the companies, a change that underpins the higher price objectives.
Company-level changes
Cloudflare - The price objective was raised to $330 from $255 while maintaining a Buy rating. The updated target is based on a 33-times fiscal 2027 enterprise value-to-sales multiple, up from a prior 25-times multiple. Bank of America emphasized Cloudflare's global network footprint, which positions the company across AI inference, application delivery, security and developer infrastructure. The analysts also cited momentum in Workers, developer services and the company's AI offerings as justification for a premium valuation.
Palo Alto Networks - The firm kept a Buy rating and lifted the target to $420 from $330. The new valuation uses a 19-times calendar 2027 sales multiple, compared with 15 times previously. Bank of America highlighted that platform consolidation should be advantageous for Palo Alto's network, cloud and security-operations businesses, and that expanding automation and AI capabilities could increase the company's share of enterprise security budgets.
SentinelOne - The Buy rating was reiterated and the price target moved to $22 from $20. The analysts pointed to SentinelOne's Singularity platform, which provides autonomous threat detection and AI-driven workflows. However, the firm noted that SentinelOne's smaller scale and lower margins justify a discount relative to larger competitors.
CrowdStrike - The target was increased to $230 from $187.50, while the stock's rating remained Neutral. Bank of America said CrowdStrike's leadership across endpoint, cloud, identity and security operations supports its growth outlook, but that these strengths are already reflected in a premium valuation.
Sector outlook and caveats
Bank of America indicated that part of the revised targets depends on continued expansion of sector multiples. The analysts flagged several risks that could undermine the outlook: slower-than-expected product adoption, weaker customer growth, intensifying competition or a broader reduction in investor appetite for highly valued software companies. These risks could affect valuations across the cybersecurity and enterprise software segments.