Charles Edwards
Founder of Capriole Investments, Digital-Asset Investing
Cybersecurity is a growing need as AI fuels attacks, which have doubled since ChatGPT's release and risen 20% since September with agentic AI. That is bullish for cybersecurity stocks and bearish for convoluted systems, DeFi and self-custody; the Coldcard incident is just the beginning. x.comÂ
AI agents expand the enterprise attack surface, creating demand for cybersecurity and agent-aware defenses. The PHP2Shell vulnerability discovery underscored AI's role in finding and exploiting flaws; prompt injection, machine identities, model supply chains and data exfiltration add risks. Morgan Stanley called cybersecurity a major structural winner as model supply explodes. x.comÂ
AI-powered attacks are spreading so fast that companies are unlikely to cut security budgets, even if they slow broader AI spending. The latest wave hit governments, banks, hospitals, grocery chains and businesses, while AI finds vulnerabilities and breaks in around the clock. That is why Cloudflare, Zscaler, CrowdStrike and Palo Alto Networks rose as broader AI concerns hit tech shares. x.com x.comÂ
Cybersecurity has one of software's strongest moats, and AI makes it more valuable because it also creates faster, more sophisticated attacks. As AI gets more capable, every layer of the security stack matters more: data security (Rubrik), identity (Okta), network (Zscaler, Netskope), endpoint (CrowdStrike, SentinelOne, Microsoft), exposure management (Qualys, Tenable) and code security (JFrog, GitLab). Rubrik, Qualys and Netskope are the largest cybersecurity positions. x.comÂ
Cybersecurity is now an essential layer of the AI theme, as agentic AI makes fraud prevention, digital identity and enterprise security indispensable. CrowdStrike found an 89% year-over-year rise in attacks by AI-enabled adversaries, and SentinelOne forecasts AI-powered phishing will exceed 42% of global intrusions in 2026. The Amplify Cybersecurity ETF is up 43% this year and the Global X Cybersecurity ETF 44%, against 16% for the Nasdaq. x.comÂ
Cloudflare has three AI-driven trends working in its favor. AI will uncover more vulnerabilities; protection against more AI bots, agents and crawlers is needed; and its developer platform, including Workers, is becoming the default for agent-related development. CrowdStrike is not a favorite. x.comÂ
OneSpan's subscription and recurring-revenue growth add operating evidence for its place among the identity-security picks. Revenue beat expectations at $63.9M, and full-year revenue, ARR and adjusted EBITDA guidance rose. Mitek and Clear Secure also look attractive. Financial institutions in Korea and India reported breaches; CrowdStrike says the Korean attacker used an AI penetration-testing tool. Binance had not confirmed the suspected hot-wallet hack. x.com x.comÂ
Cybersecurity stocks have a powerful long-term tailwind because more AI means more complexity, more attack surface and more need for security. CrowdStrike, SentinelOne, Palo Alto Networks, Zscaler, Fortinet, Okta and Rubrik moved up strongly premarket after Anthropic CEO Dario Amodei published an essay arguing the AI industry should slow down, with Anthropic committing to give third-party evaluators permanent access to verify its safety measures. The market may be connecting those dots. x.comÂ
Cybersecurity stocks look increasingly bullish on higher timeframes as capital rotates out of AI infrastructure. A new buy signal has appeared on the Startup indicators for the group; the indicators' earlier sell signal caught a roughly 20% drop and their buy signals a roughly 62% rally. The signal can still be invalidated before the weekly close, and the AI trade is not close to over. x.com x.comÂ
Cybersecurity may be the next big AI trade, because AI agents create a whole new attack surface. CrowdStrike CEO George Kurtz says the threat is now autonomous campaigns at machine speed, and each agent becomes a privileged identity needing least-privilege access and a kill switch, pushing security into runtime infrastructure. CrowdStrike, Palo Alto and Zscaler are in a land grab. CrowdStrike's 15 years of telemetry can't be copied, making its Threat Graph a network effect. x.comÂ
Cybersecurity stocks catching a bid makes sense, because boards and CTOs will react strongly to cyber risks from agent proliferation. AI lab chiefs Dario Amodei and Sam Altman proving untrustworthy again also makes CTOs less willing to use their labs for cyber. The multiples are too high, though. x.comÂ
