Investing.com — The cybersecurity sector is poised for strong fundamentals improvement in 2025, given the constant demand for platform-based solutions, according to a Goldman Sachs.

Companies want Fortinet Inc (NASDAQ:), CrowdStrike Holdings Inc (NASDAQ:), and Cloudflare Inc (NYSE:) saw more gains in 2024, with the stock up 63%, 37%, and 31% respectively.

These leaders are rewarded for their platform-driven approaches, which align with the CIO’s (chief information officer) increasing focus on total cost of ownership and vendor consolidation. However, product companies want the point Okta Inc (NASDAQ:) and Zscaler (NASDAQ:) slumped, with the stock down 12% and 17%, respectively.

Goldman Sachs upgraded Cloudflare Inc (NYSE: ) to a “buy” with a $140 price target, given its continued improvement in sales productivity and its growing traction in developer services. driven by AI. It projects 28% upside for the stock, fueled by new monetization opportunities in edge computing and AI inferencing.

While Check Point Software (NASDAQ: ) was downgraded to “neutral” due to expected pressures on EPS growth in 2025. While the company is expected to benefit from a refresh cycle and additional investments under of new leadership, Goldman warned that meaningful revenue growth may not materialize. until 2026.

Other notable calls include Fortinet, which maintains a “buy” rating with a 20% upside potential. The company is well-positioned to take advantage of an increased firewall refresh cycle, with analysts highlighting Fortinet’s extensive cross-sell opportunities in its network portfolio.

The cybersecurity sector exits 2024 trading at a 25% premium to the broader software industry based on enterprise value-to-sales multiples. This estimate reflects favorable long-term growth drivers for the sector, including rising breach risks, increased regulatory scrutiny, and the adoption of advanced AI technologies.

While the sector is expected to grow by 9% annually in 2025, slightly down from 2024, the report says that decelerating trends have stabilized. This is likely to set the stage for positive changes in earnings in the coming quarters.

GS flagged potential competitive pressure from hyperscalers like Microsoft (NASDAQ: ) and Google (NASDAQ: ), which are expanding their security offerings. It also points to geopolitical and macroeconomic uncertainties, especially in key markets such as Europe.

However, the broader industry outlook remains optimistic.

As cybersecurity companies navigate a volatile macro environment, those with strong platform strategies and differentiated offerings appear best positioned to outperform in 2025 and beyond.