Okta-Cisco Systems vs. OKTA: Which Cybersecurity Stock Should You Bet On?

Core Viewpoint - The cybersecurity market is projected to grow significantly, benefiting both Cisco Systems and Okta, with Cisco focusing on enterprise network security and Okta on identity and access management [2]. Group 1: Cisco Systems - Cisco Systems' security business is experiencing robust growth, with strong demand for Cisco Secure Access and XDR, attracting over 1,000 customers and approximately 1 million enterprise users for each product [3]. - In Q2 fiscal 2025, Cisco's security orders more than doubled, with security revenues increasing 117% year over year to $2.11 billion, driven by Splunk, SASE, and Network Security [4]. - Cisco launched new security products, including Splunk on Azure and AI Assistant for Splunk Observability, expanding its security portfolio [5]. - Cisco is collaborating with NVIDIA to develop the Cisco Secure AI Factory, focusing on securing AI infrastructure [6]. Group 2: Okta - Okta is experiencing strong demand for its identity security solutions, with over 20% of Q4 fiscal 2025 bookings from new products, including Okta Identity Governance and Identity Threat Protection [7]. - The company served 19,650 customers by the end of Q4 fiscal 2025, reflecting a growing need for secure identity management [8]. - Okta's partnership with AWS has strengthened its security efforts, with over 70% of deals influenced by partners, surpassing$ 1 billion in total contract value through this partnership [9]. Group 3: Stock Performance and Valuation - Year to date, Cisco shares have decreased by 10.2%, while Okta shares have increased by 15.9%, with Cisco facing challenges from macroeconomic uncertainty and competition [10]. - Both Cisco and Okta shares are currently considered overvalued, with Cisco trading at a forward Price/Sales ratio of 3.64X and Okta at 5.47X [13]. - The Zacks Consensus Estimate for Cisco's fiscal 2025 earnings is $3.72 per share, indicating a 0.27% decline year over year, while Okta's fiscal 2026 earnings estimate is$ 3.17 per share, reflecting a 12.81% increase year over year [16]. Group 4: Earnings Performance - Both Cisco and Okta have consistently beaten earnings estimates in the past four quarters, with Okta showing a higher average surprise of 15.7% compared to Cisco's 4.07% [17]. Group 5: Conclusion - Okta is viewed as a more attractive investment due to its focus on identity solutions, stronger earnings performance, and higher growth potential, while Cisco is expanding its security footprint [18].