January 31, 2025
This Israeli Tech Firm Beat the Market by 277%
Dear Subscriber,
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| By Michael A. Robinson |
It’s not often we get to read about peace in the Middle East.
But just a little over a week ago, Israel and Hamas agreed to a ceasefire, putting a potential end to the conflict that has engulfed the region and gripped the world for the past 15 months.
Early on, it seemed as if the war would bring problems for Israel’s tech sector, one of the biggest in the world.
Yet surprisingly, investment into Israeli technology startups actually grew nearly 30% last year, according to data compiled by Pitchbook.
The $10.6 billion helped shore up the nation’s economy and its defense — 40% of all private capital raised went toward cybersecurity.
This was great news for investors, too. Israel tech firms are some of the best — and most profitable — in the world. And today, I want to tell you more about one tech company in particular …
It’s a cyber leader whose stock has beaten the S&P 500 since I first mentioned it to you last May by 277%.
Even better, it’s on pace to double its earnings in as little as two and a half years.
Placing a Priority on Technology
In Israel, technology is a big deal. In fact, the sector accounts for 20% of the country’s gross domestic product (GDP) and about 10% of employment.
It makes sense, then, that Israel’s technology scene is such a hotbed for investment activity. But that’s only part of the story.
The technology that stems from Israel is valuable. And there are several reasons why.
For starters, Israel boasts a highly educated and skilled workforce. And that workforce places a strong emphasis on research & development.
Furthermore, Israelis must complete mandatory military service, which seems to foster a sense of duty and innovation that leads to inspiration.
Willing and eager employees are only half of the equation, though. They benefit from a government that offers strong support for startups. And a thriving market for venture capitalists usually means the money is flowing.
Cybersecurity is a particularly strong tech sector in Israel, which is part of the larger defense market.
That’s due in part to the country’s strong focus on national security and its proactive approach to defending itself against adversaries.
And don’t forget the former military members, many of whom served in elite, cyber-focused units.
Two of these men include Udi Mokady and Alon Cohen, both of whom served in Israeli military intelligence units. In 1999, the duo took their experience and decided to start a unique security company.
Meet the PAM Leader
It’s called CyberArk Software (CYBR),and it focuses on identity security. The offerings cover workforce and customer network access, cloud-computing security and identity management.
And it’s an industry leader in a sector known as privileged access management, also referred to as PAM.
You see, hackers often aim to compromise networks by targeting insiders — employees or management with administrative access to a company’s systems.
As a result, more companies are shifting cyber budgets to identity and access management tools that address insider threats — tools like the ones provided by CyberArk.
Using the company’s platforms, IT departments can ensure people working from remote locations have the proper access to complete the job without giving them too much access so as to put them at risk of cyber threats.
Not only does CyberArk focus on managing people's identity, but it also focuses on machine identity management.
In May 2024, the company acquired Venafi for $1.5 billion, a company with technology that monitors software interfaces, bots and industrial sensors that access business infrastructure.
Of course, these days, the firm also has a vested interest in AI. Let me explain …
Say Hi to CORA
In 2023, the company announced a new AI Center for Excellence. Its goal was to advance the use of generative AI to improve security.
Essentially, this center was designed to work with CYBR to evolve AI-powered defenses like risk analysis and risk reduction.
Then last year, CyberArk created CORA AI, a central hub of identity security-focused AI capabilities.
CORA analyses and understands a user’s activities … and will detect, respond to and highlight the most critical information. This eliminates the need to review hours of recorded web footage.
It also detects and notifies about security anomalies that could signal that an identity has been compromised. This increases investigation and response times significantly.
The AI isn’t just a middleman. It can take action, too …
Privileged access management and toolset data are automatically collected and analyzed. That way, CORA can look for partners and create new policies a company can use to tighten its security.
Finally, CORA can protect users in the form of a chatbot. It can answer questions without the need to search and read through lengthy documentation, offering clear, real-time explanations and guidance.
Essentially CyberArk customers can use this AI to detect and respond to identity threats, as well as make better, data-driven decisions. It can also be used to secure every identity in an organization — human and machine.
It’s Not too Late
If the name of this company sounds familiar, it’s because I introduced you to it last May.
Since that time, its stock has delivered 61.1% returns, beating the return of the S&P 500 over that stretch by 277%.
Don’t worry if you missed out on these gains, though. There’s plenty of upside ahead.
In the most recent quarter, the firm grew per-share profits by 124%.
Even at one-fourth that rate, we’d see earnings double in about 2.5 years. And remember, when earnings grow, stock prices usually do, too.
Bottom line: CYBR is a great way to play Israel’s strong tech sector. And it’s a good bet to continue outpacing the broader market.
Best,
Michael A. Robinson
P.S. Israel isn’t the only country pouring resources into AI for defense. In fact, on Tuesday, I’ll be hosting a special event that will reveal the winners of a $35 Trillion Tech Alliance right here in the U.S. Grab your seat here.
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