An Introduction

• Cyber crime damage is reported (see here) to reach $10.3 trillion by next year making the need for sophisticated cyber security crucial to protect networks, systems and other digital infrastructure from malicious cyber attacks (see here).
• On the other hand, however, it is estimated that cyber security spending was only $188B in 2023.
• Research (source) forecasting that corporate spending on cybersecurity should grow at a CAGR of 13.8% between now and 2030 (source) suggests that many cybersecurity software and hardware companies should be excellent long-term buys.

AI’s Role In Cyber Security

AI enables cyber security companies to train their models with data from previous attacks to create autonomous systems that can detect if an attack is ongoing based on certain readings. As a result hat increases companies’ lead time for an attack and allows them to prepare mitigation and response strategies. Video: How AI is changing the cybersecurity landscape

Some Background

eSecutityPlanet.com provides a list of cyber security companies (see here) of which the 5 largest of those companies (i.e. +$20B in market capitalization) are highlighted in our Pure-Play Cybersecurity Software Stocks Portfolio. The Portfolio was down 9.6% w/e Sept. 6th after the ISM manufacturing index reported August figures below consensus raising fears about the health of the economy. That fear subsided during the w/e Sept. 13th, however, with 4 of the 5 constituents in the Portfolio bouncing back by an average of 4.4%.

The Pure-Play Cybersecurity Software Stocks Portfolio

Below are how the 5 constituents performed last week, in descending order, during the week ending Sept. 6th, and YTD, along with their market capitalizations, and the most recent news, analyses and/or commentary on some of them.

1. Zscaler (ZS): UP 8.5% w/e Sept. 13th; DOWN 21.6% w/e Sept. 6th; DOWN 23.2% YTD
   • Market Capitalization: $25.9B
   • Most Recent News, Analyses, and/or Commentary:
     • Zscaler Report F/Y 2024 Earnings Beat Expectations
2. CrowdStrike Holdings (CRWD): UP 5.2% w/e Sept. 13th; UP 2.1% w/e Sept. 6th; UP 1.5% YTD
   • Market Capitalization: $63.5B
   • Most Recent News, Analyses, and/or Commentary:
     • Hedge Funds Are Bullish on CrowdStrike: Here's Why
3. Check Point Software Technologies (CHKP): UP 3.6% w/e Sept. 13th; DOWN 2.1% w/e Sept. 6th; UP 27.7% YTD
   • Market Capitalization: $22.0B
   • Most Recent News, Analyses, and/or Commentary:
     • Check Point Software Debuts on World’s Best Companies of 2024 List by TIME and Statista
4. Palo Alto Networks (PANW): UP 3.3% w/e Sept. 13th; DOWN 7.4% w/e Sept. 6th; UP 17.6% YTD 
   • Market Capitalization: $113.0B
   • Most Recent News, Analyses, and/or Commentary:
     • Palo Alto Networks Rose Due to its Focus on Larger Platform Contracts
5. Fortinet (FTNT): DOWN 0.2% w/e Sept. 13th; DOWN 2.0% w/e Sept. 6th; UP 28.1% YTD
   • Market Capitalization: $57.4B
   • Most Recent News, Analyses, and Commentary:
     • Fortinet Lags the Stock Market: Here's Why

Summary

On average, the above 5 pure-play cybersecurity software stocks went UP 4.4% last week, DOWN 9.6% the previous week, and are now UP 9.8% YTD. The constituents have an average market capitalization of $56.4B

Cybersecurity ETF

Investing in a basket of cyber security stocks is a quick and easy way to get investment portfolio exposure to this critical segment of the tech sector. The Global X Cybersecurity ETF (BUG), for example, consists of 31 stocks and has an expense ratio of 0.51%.

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