Zscaler, Netskope among BTIG's top picks in security, infrastructure software stocks heading into 2026
Dec. 13, 2025 8:00 AM ET
By: Ravikash Bakolia, SA News Editor
BTIG's top large-cap pick in security and infrastructure software stocks for the first half of 2026 is Zscaler ( ZS), while the top small-and-mid-cap pick is Netskope ( NTSK)
The firm's other favored names include Snowflake ( SNOW), SailPoint ( SAIL) and Datadog ( DDOG).
BTIG provided a review of 2025 and an outlook for 2026, highlighting key themes across its security and infrastructure software coverage.
"On the security front, we believe demand has stabilized, with the companies we cover set to sustain 15%–16% revenue growth next year, similar to 2025. Securing AI will likely remain a central theme, but we expect buyers to prioritize existing vendor capabilities before committing significant budgets to emerging, AI-specific security solutions. This transition will happen over time. But we think it will be gradual," said analysts led by Gray Powell.
The analysts also expect continued emphasis on platform adoption, with companies offeringbest-in-class products and expanding functionality within current buying centers and adjacent markets likely to outperform. On the observability side, the analysts expect customers to focus on vendor consolidation to streamline operations, and see more tailwinds from AI adoption than risk.
2025 Review"It has been a rough year for our security and infrastructure software coverage. Despite stable top line performance, the group lagged major indices meaningfully. The YTD median return for the group is currently -0.8% versus a 22% gain in the Nasdaq," said Powell and his team.
The analysts noted that the top five performers were Cloudflare ( NET), MongoDB ( MDB), CrowdStrike ( CRWD), Snowflake and CyberArk Software ( CYBR). All are expected to benefit from AI in varying forms. Bottom performers this year can generally be categorized as point solutions in segments being commoditized by larger platform vendors and/or seeing headwinds related to AI, according to the analysts.
The analysts added that, as bad as the stock performance was this year, operational results were good. The typical company saw out-year revenue estimates revised higher by over 1%. The biggest upward revision to 2026 revenue forecasts came at Snowflake (+6.3%), while Okta ( OKTA) and Elastic ( ESTC) were tied for second (+3.7% each). The biggest downside revisions came at OneSpan ( OSPN) (-11.4%), Rapid7 ( RPD) (-7.0%) and SentinelOne ( S) (-5.2%), according to the analysts.
Outlook 2026"Cyber security growth has been stabilizing over the course of 2025. The companies we cover are on-track to grow at a 16% pace this year, and we expect similar growth in 2026. We remain most optimistic about cloud security, Secure Service Edge/Zero Trust, and identity. In addition, we see agrowing opportunity for vendors to disrupt the SIEM [Security Information and Event Management] space," said Powell and his team.
The analysts noted that while AI security is a major emerging theme, they expect most organizations will stick with current vendor solutions to protect AI workloads over the next 12 to 18 months.
BTIG's top AI exposure names include Netskope, SailPoint, Cloudflare, Zscaler, Palo Alto Networks ( PANW) and CrowdStrike.
"Platform consolidation also remains a top theme. But in our fieldwork, skepticism persists over whether any vendor can truly offer best-in-class products across multiple security categories. We favor companies with strong multi-product offerings, especially those able to drive adoption within the same or adjacent buying centers," said the analysts.
The analysts think CrowdStrike, Zscaler, and Palo Alto Networks play best on the platform theme.
"We remain positive on the observability space. We see customers prioritizing vendor consolidation, benefiting both DDOG and Dynatrace ( DT). Vendors should see tailwinds from the proliferation of workloads from AI," said Powell and his team.
The analysts noted that Palo Alto's entry into observability with the announced acquisition of Chronosphere introduces a new potential disruptive catalyst to the market. However, the analysts added that they have seen Palo Alto's price aggressively in other verticals, like in endpointsecurity. In that scenario, there was little impact to the market leader CrowdStrike. "In the case of observability, we see similar dynamics with DDOG and DT," said Powell and his team. |
