Investors quietly shift positions: Leading U.S. cybersecurity stocks soar over 100% in three months

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While the market's attention is focused on the volatility of the AI sector and the sharp fluctuations of the momentum factor, a subtle migration of capital is taking place in the field of cybersecurity software. Over the past three months, some leading U.S. security software stocks have risen by more than 100%, and demand for cloud computing has also rebounded, jointly depicting a picture of structural rotation within the technology sector.

U.S. cybersecurity giants Palo Alto Networks and Rapid7 led the gains, both rising more than 100% in three months. CrowdStrike, Qualys, Fortinet, Okta, and Tenable followed closely, with gains ranging from 85% to 95%. Meanwhile, the main cloud service providers have also seen a reacceleration in business growth driven by AI demand.

The backdrop to this rally is the violent fluctuation of the momentum factor—which, after a 33% drawdown, rebounded by more than 9% in a single day, marking the biggest one-day gain in nearly five years. According to Goldman Sachs data, the 30-day volatility of the momentum factor relative to the index volatility is at an extremely elevated level, suggesting that extreme single-day market moves may continue to occur.

An Underestimated Rotation Main Line

While adjustments in AI concept stocks and drastic momentum factor fluctuations attract widespread attention, capital has already completed a significant accumulation in the cybersecurity software sector.

According to market data, Palo Alto Networks and Rapid7 have both surged over 100% in the past three months, while CrowdStrike, Qualys, Fortinet, Okta, and Tenable have seen gains concentrated between 85% and 95%.

From a valuation perspective, Palo Alto Networks and CrowdStrike’s forward EV/Sales multiples have risen sharply along with their stock prices, but investors continue to buy. This phenomenon shows that the market is assigning a high premium to the logic of long-term growth in cybersecurity demand, rather than mere short-term speculation.

Cloud Computing Demand Reaccelerates

According to Coatue data, the business growth of major cloud service providers is reaccelerating as AI adoption increases.

This provides fundamental support for the overall valuation of the tech sector and forms an important background for the continued expansion of demand for security software—the deepening of enterprise cloud adoption is directly driving procurement of authentication, endpoint protection, and cloud security products.

Momentum Is AI: The Structural Nature of Factor Trading

Goldman Sachs Marquee platform data shows that the correlation between the momentum factor and AI-related assets has risen to an extreme level above 95%, meaning momentum trading is essentially the same as AI trading.

This structural feature explains why every fluctuation in the AI sector produces amplified effects at the momentum factor level and affects a broader range of tech holdings.

For ordinary investors outside of quantitative strategies, this means that even if they are not directly participating in factor trading, their actual tech exposure is highly bound to the AI theme.

Long-Short Divide: Bubble Controversy Heats Up

There are obvious differences in the market’s view of current tech valuations.

On the bullish side, Fidelity’s Timmer believes that although the S&P 500’s price trends closely resemble the path in 1999, the fundamentals are “far healthier than 26 years ago,” and there is no need to be overly worried about bubble risks. Research firm Numera points out that tech stock returns are usually synchronized with changes in IT hardware, software, and semiconductor demand, but this year’s tech stock rally still appears insufficient compared to the actual explosion in demand, suggesting more upside potential has yet to be released.

On the bearish side, the semiconductor sector’s share of S&P 500 market cap has reached 14%, nearly twice the peak level during the internet bubble. Market strategist Andy Constan bluntly states: “We’re in a bubble. I don’t know if the top is in, but if the bubble bursts at this moment, the trajectory will look a lot like the internet bubble—first, months of choppy consolidation.”

Apple’s valuation provides another reference point: its price-to-sales ratio has approached 11x, an all-time high for the company. According to Bilello, this number surpasses any other period in the company's history.

Risk Disclosure and DisclaimerThe market involves risk; investment requires caution. This article does not constitute personal investment advice, nor does it take into account the individual investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment decisions made based on this content are at your own risk. ```