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The AI rally has gone through several iterations, and the latest is the hardware-to-software rotation. AI's threat to major software providers was likely always overblown, but it's never been more apparent in the cybersecurity space.
Cybersecurity ETFs gain momentum as cyber leaders like FTNT post strong Q2 results, fueled by rising AI-driven threats and demand for security.
AI is transforming cybersecurity-and cybercrime. Here are cybersecurity ETFs positioned to capitalize on rising demand.
Bank of America Corp DE lowered its stake in iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) by 9.1% in the undefined quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission. The institutional investor owned 1,646,229 shares of the company's stock after selling 165,266 shares
IHAK, the iShares Cybersecurity and Tech ETF, is downgraded to Hold after outperforming the S&P 500 with a 20% return since September 2025. IHAK's valuation is now moderate, matching the S&P 500's P/E just above 21, and its technical setup signals potential consolidation or pullback. Momentum has been stellar, but a bearish RSI divergence and recent achievement of a key technical target suggest caution in the near term.
The iShares Cybersecurity and Tech ETF has focused exposure to the cybersecurity sector, with a more direct approach than broader tech ETFs like the Amplify Cybersecurity ETF and the First Trust Nasdaq Cybersecurity ETF. Current valuations for IHAK are stretched (P/E ~27x), but forward growth prospects and PEG (~1.53x) align with the broader tech sector. Global cybersecurity spending is expanding at double-digit rates, supported by regulatory tailwinds and structural demand.
Cybersecurity ETFs are gaining traction as AI-driven cloud expansion fuels demand for digital protection and risk management.
The average cost of resolving a data breach in 2026 is $4.4 million. Cybersecurity is no longer a luxury but a necessity.