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AI safety concerns are rising, but that could create another tailwind for cybersecurity. Here are ETFs positioned to benefit from growing security needs.
Cybersecurity is the top play in AI because AI can not exist without it. Labs need the highest-quality protection to ensure their models are well-trained and reliable; enterprises need protection from the proliferation of agents and lightning-fast attacks; and everyone needs to ensure data is safe and reliable so models work.
September may bring seasonal volatility, but strong earnings and key growth themes could support these ETFs.
I rate First Trust NASDAQ Cybersecurity ETF a Buy, citing its leadership in platform consolidation and strong sector positioning. CIBR's 27% allocation to PANW, FTNT, and CRWD aligns with CISO demand for streamlined, all-suite cybersecurity solutions amid rising AI-driven threats. Despite recent shocks, the ETF has outperformed peers in 6 of 8 years, demonstrating resilience and superior risk-adjusted returns.
First Trust Nasdaq Cybersecurity ETF (CIBR) remains rated Hold due to stretched valuations, despite a ~35% total return since November. CIBR's portfolio structure has improved, with reduced concentration and a more thematic cybersecurity focus, but top holdings like PANW and CRWD are expensive. Valuation headroom is limited, especially among leading names; recent rally appears overextended relative to unresolved AI-related risks.
Usually, when investors are investing in a tech stock these days, it's because the company is well-positioned to benefit from embracing AI. Of course, AI adoption comes in multiple shades, such as new models, cloud computing, and more.
CrowdStrike's earnings beat highlights strong cybersecurity demand. Discover ETFs positioned to benefit from CRWD's growth and the broader sector's momentum.
Cybersecurity ETFs gain momentum as cyber leaders like FTNT post strong Q2 results, fueled by rising AI-driven threats and demand for security.