The Israel-Iran conflict has put geopolitics squarely on the radar of investors. In tense moments like these, the importance of owning cybersecurity stocks within a diversified portfolio is impossible to ignore. The overall market reaction to the attacks between the longtime regional foes has, admittedly, been fairly subdued since the strikes began late Thursday local time in New York. The S & P 500 had lost just 1% over the past three trading days. That hardly fits the description of a dramatic sell-off, as investors continue to bet that the conflict will not spillover into a broader entanglement that weighs on global growth. And yet, Club cybersecurity holdings CrowdStrike and Palo Alto Networks held up even better than the broader market and a basket of software peers in that stretch. CrowdStrike and Palo Alto Networks both entered Wednesday’s session up more than 2% over the past three days. The iShares Expanded Tech-Software Sector ETF, meanwhile, dropped about 0.4%. To be sure, in Wednesday’s session, the broader market was higher and our cyber names were giving back some of their recent gains. Earlier Wednesday, President Donald Trump said outside the White House that Iran wanted to negotiate — comments that boosted stocks and sent oil prices lower. The trading action in oil is one way to measure how the market is assessing the geopolitical tensions. CRWD PANW YTD mountain CrowdStrike’s stock performance versus Palo Alto Networks so far in 2025. This is not the first time that we’ve seen cybersecurity stocks hold up better than their tech-industry peers during periods of market disruption. The cohort acted defensively and outperformed the aforementioned software ETF earlier this year when Trump’s tariff rhetoric began ramping up. In our minds, the relative stability of cybersecurity stocks amid market turbulence is part of a broader, long-term trend rather than a flash in the pan. The reason is that cybersecurity has become indispensable in today’s digital landscape, particularly during geopolitical unrest. Consider the findings of the World Economic Forum’s 2025 cybersecurity outlook. “Nearly 60% of organizations state that geopolitical tensions have affected their cybersecurity strategy,” according to the report, which was published in January. Additionally, one in three CEOs that responded to the survey said “cyber espionage and loss of sensitive information/intellectual property (IP) theft” is a top concern. And finally, 72% of respondents reported heightened cyber risks, driven partly by the rapid adoption of artificial intelligence, which empowers cybercriminals, with ransomware remaining a persistent threat. This environment signals strong demand for advanced cybersecurity solutions, which CrowdStrike and Palo Alto Networks have. Both companies are capitalizing on mounting security concerns across the corporate and government worlds. That leads investors like us to believe that both Palo Alto and CrowdStrike are well-positioned to deliver long-term value while offering stability amid volatility in the near term. (Jim Cramer’s Charitable Trust is long PANW, CRWD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
