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AI-enabled cybercrime and growing security needs could support long-term cybersecurity demand.
The global cybersecurity market is projected to witness a CAGR of 13.8% from 2026 to 2034.
Cybersecurity ETFs offer diversified exposure to a sector benefiting from rising AI risks.
Growing safety concerns and AI-related financing arrangements have raised questions about the sustainability of the AI trade and the broader technology sector. However, the market continues to balance near-term concerns with long-term growth opportunities, making one thing clear — despite bouts of volatility, Wall Street has not given up on AI.
However, for investors, navigating this uncertain environment while maintaining portfolio resilience could prove challenging, particularly as they look for sectors with potentially more defensive characteristics without giving up growth opportunities.
One potential beneficiary amid this uncertainty could be cybersecurity, which may offer investors exposure to AI-driven growth while providing a relatively defensive investment theme amid volatility surrounding the AI trade.
The cybersecurity sector’s growth prospects are reflected in the strong performance of the S&P Kensho Cyber Security Index. The index, which tracks companies with significant exposure to cybersecurity-related activities, has gained about 42.43% from the start of the year till Oct. 15, highlighting growing investor interest in the sector.
The sector's long-term outlook also remains encouraging, increasing its appeal as an investment theme. The global cybersecurity market is anticipated to witness a CAGR of 13.8% from 2026 to 2034, reaching a valuation of $699.39 billion in 2034, according to Fortune Business Insights.
What Is Driving Cybersecurity Demand?
Growing concerns about AI safety and emerging threats could create additional opportunities for the sector. Cybersecurity firms could be well positioned to benefit from efforts to secure AI infrastructure and mitigate AI-related risks. As these risks evolve, protecting AI systems and infrastructure is likely to become a greater priority for businesses and economies, potentially creating an additional tailwind for cybersecurity companies.
The sector’s growth prospects could also benefit from the rise of AI-enabled cybercrime. The growing threat of AI-enabled cybercrime further strengthens the link between AI adoption and cybersecurity demand. As AI tools make cyberattacks potentially more sophisticated, scalable and difficult to detect, the need for stronger cybersecurity defenses is becoming increasingly important.
Additionally, the cybersecurity sector’s long-term outlook could also benefit from the growing role of cyberwarfare amid an increasingly fragile and complex geopolitical environment. As conflicts increasingly extend into the digital domain, governments and defense agencies may allocate more resources to military-grade cybersecurity and protecting critical infrastructure. This could provide an additional source of demand for cybersecurity solutions, supporting the sector’s long-term growth potential.
The Case for Increasing Cybersecurity Exposure
One factor that distinguishes cybersecurity from many other investment themes is its potential resilience amid economic uncertainty. Cyber threats remain a persistent concern regardless of market conditions, supporting demand for security solutions in both bullish and bearish environments.
AI adoption and deployment require robust cybersecurity infrastructure to help protect systems, data and digital operations. This makes cybersecurity a complementary theme for investors seeking exposure to the broader AI growth story.
Importantly, the sector’s demand drivers are not solely dependent on continued enthusiasm for AI. Even if concerns about an AI bubble or a slowdown in adoption weigh on technology stocks, businesses will still need to safeguard their existing systems, data and applications.
This makes cybersecurity worth considering amid differing investor views on the AI trade, whether optimism about AI’s growth prospects persists or concerns about finance-related worries and a potential bubble weigh on sentiment.
Cybersecurity offers investors a way to tap into a relatively defensive area of the broader tech sector and the AI ecosystem without sacrificing growth potential.
ETFs to Invest in Cybersecurity
Against this backdrop, cybersecurity remains a compelling area to watch, regardless of whether investors are bullish or cautious about the AI trade. For those looking to tap into the industry’s growth potential without having to pick individual winners, cybersecurity ETFs offer a convenient solution.
Cybersecurity ETFs offer a straightforward way to gain exposure to this rapidly evolving industry while reducing the risks associated with investing in individual stocks. By offering diversified exposure to companies across the cybersecurity landscape, these funds allow investors to benefit from rising demand for digital security solutions and the sector’s favorable long-term outlook without having to pick individual winners.
Below, we highlight a few ETFs that provide investors with an opportunity to capitalize on cybersecurity’s growth potential.
Xtrackers Cybersecurity Select Equity ETF seeks to track the performance of Solactive Cyber Security Focus Index. The fund charges an annual fee of 0.20%.
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A Guide to Investing in Cybersecurity ETFs
Key Takeaways
Growing safety concerns and AI-related financing arrangements have raised questions about the sustainability of the AI trade and the broader technology sector. However, the market continues to balance near-term concerns with long-term growth opportunities, making one thing clear — despite bouts of volatility, Wall Street has not given up on AI.
However, for investors, navigating this uncertain environment while maintaining portfolio resilience could prove challenging, particularly as they look for sectors with potentially more defensive characteristics without giving up growth opportunities.
One potential beneficiary amid this uncertainty could be cybersecurity, which may offer investors exposure to AI-driven growth while providing a relatively defensive investment theme amid volatility surrounding the AI trade.
The cybersecurity sector’s growth prospects are reflected in the strong performance of the S&P Kensho Cyber Security Index. The index, which tracks companies with significant exposure to cybersecurity-related activities, has gained about 42.43% from the start of the year till Oct. 15, highlighting growing investor interest in the sector.
The sector's long-term outlook also remains encouraging, increasing its appeal as an investment theme. The global cybersecurity market is anticipated to witness a CAGR of 13.8% from 2026 to 2034, reaching a valuation of $699.39 billion in 2034, according to Fortune Business Insights.
What Is Driving Cybersecurity Demand?
Growing concerns about AI safety and emerging threats could create additional opportunities for the sector. Cybersecurity firms could be well positioned to benefit from efforts to secure AI infrastructure and mitigate AI-related risks. As these risks evolve, protecting AI systems and infrastructure is likely to become a greater priority for businesses and economies, potentially creating an additional tailwind for cybersecurity companies.
The sector’s growth prospects could also benefit from the rise of AI-enabled cybercrime. The growing threat of AI-enabled cybercrime further strengthens the link between AI adoption and cybersecurity demand. As AI tools make cyberattacks potentially more sophisticated, scalable and difficult to detect, the need for stronger cybersecurity defenses is becoming increasingly important.
Additionally, the cybersecurity sector’s long-term outlook could also benefit from the growing role of cyberwarfare amid an increasingly fragile and complex geopolitical environment. As conflicts increasingly extend into the digital domain, governments and defense agencies may allocate more resources to military-grade cybersecurity and protecting critical infrastructure. This could provide an additional source of demand for cybersecurity solutions, supporting the sector’s long-term growth potential.
The Case for Increasing Cybersecurity Exposure
One factor that distinguishes cybersecurity from many other investment themes is its potential resilience amid economic uncertainty. Cyber threats remain a persistent concern regardless of market conditions, supporting demand for security solutions in both bullish and bearish environments.
AI adoption and deployment require robust cybersecurity infrastructure to help protect systems, data and digital operations. This makes cybersecurity a complementary theme for investors seeking exposure to the broader AI growth story.
Importantly, the sector’s demand drivers are not solely dependent on continued enthusiasm for AI. Even if concerns about an AI bubble or a slowdown in adoption weigh on technology stocks, businesses will still need to safeguard their existing systems, data and applications.
This makes cybersecurity worth considering amid differing investor views on the AI trade, whether optimism about AI’s growth prospects persists or concerns about finance-related worries and a potential bubble weigh on sentiment.
Cybersecurity offers investors a way to tap into a relatively defensive area of the broader tech sector and the AI ecosystem without sacrificing growth potential.
ETFs to Invest in Cybersecurity
Against this backdrop, cybersecurity remains a compelling area to watch, regardless of whether investors are bullish or cautious about the AI trade. For those looking to tap into the industry’s growth potential without having to pick individual winners, cybersecurity ETFs offer a convenient solution.
Cybersecurity ETFs offer a straightforward way to gain exposure to this rapidly evolving industry while reducing the risks associated with investing in individual stocks. By offering diversified exposure to companies across the cybersecurity landscape, these funds allow investors to benefit from rising demand for digital security solutions and the sector’s favorable long-term outlook without having to pick individual winners.
Below, we highlight a few ETFs that provide investors with an opportunity to capitalize on cybersecurity’s growth potential.
First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report)
First Trust NASDAQ Cybersecurity ETF seeks to track the performance of the Nasdaq CTA Cybersecurity Index. The fund charges an annual fee of 0.58%.
Amplify Cybersecurity ETF (HACK - Free Report)
Amplify Cybersecurity ETF seeks to track the performance of the Nasdaq ISE Cyber Security Select Index. The fund charges an annual fee of 0.60%.
Global X Cybersecurity ETF (BUG - Free Report)
Global X Cybersecurity ETF seeks to track the performance of Indxx Cybersecurity Index. The fund charges an annual fee of 0.50%.
iShares Cybersecurity & Tech ETF (IHAK - Free Report)
iShares Cybersecurity & Tech ETF seeks to track the performance of NYSE FactSet Global Cyber Security Index. The fund charges an annual fee of 0.47%.
WisdomTreeCybersecurity Fund (WCBR - Free Report)
WisdomTree Cybersecurity Fund seeks to track the performance of WisdomTree Team8 Cybersecurity Index. The fund charges an annual fee of 0.45%.
Themes Cybersecurity ETF (SPAM - Free Report)
Themes Cybersecurity ETF seeks to track the performance of Solactive Cyber Security Index. The fund charges an annual fee of 0.35%.
Xtrackers Cybersecurity Select Equity ETF (PSWD - Free Report)
Xtrackers Cybersecurity Select Equity ETF seeks to track the performance of Solactive Cyber Security Focus Index. The fund charges an annual fee of 0.20%.