AI track takes off, can cybersecurity stocks ride the wind and waves?

As AI develops rapidly and cloud applications become widespread, information security has risen from a supporting role to the main stage. TSMC Chairman Morris Chang once said, “The pandemic accelerated digitalization by 10 years,” and generative AI could double that speed. If in the past the internet world still had defensive space, the AI era is a time of full exposure—human-machine interaction, machine interconnection, every data contact point is a potential risk.

For this reason, many investors are beginning to focus on cybersecurity stocks. Amid declining consumer electronics demand and a stagnant global economy, the cybersecurity sector is growing against the trend, becoming one of the few investment tracks with certainty.

AI Era, Data Security Becomes the First Lesson for Enterprises

Cloud adoption has become a trend, but accompanying security concerns are also escalating. Quantum computers are no longer science fiction, and the risks of cracking traditional encryption methods are approaching. As a result, many companies are investing heavily to maintain information security—because the more valuable the data in the cloud, the higher the protection costs, which is the core business opportunity of the cybersecurity industry.

According to data, the global cybersecurity market size reached $240.27 billion last year, and is projected to grow to $345.4 billion by 2026, with an annual growth rate of 9.5%. During economic downturns, such growth rates are rare.

Advanced Cybersecurity Industry: From Products to Services

The cybersecurity industry is divided into two main areas: products and services. As manufacturing, finance, healthcare, retail, transportation, and other industries increase their digitalization, positions once thought “unreplaceable by AI” are now at risk. The demand for cybersecurity protection is also expanding—every device in smart cities needs to be connected, autonomous vehicles require network communication, which means larger data flows and more defensive lines.

Hacker attack methods are constantly evolving, and responding to level-appropriate cybersecurity incidents has become a necessary course for enterprises. During this industry boom, investing in leading companies is the key.

Why Must You Choose Leading Cybersecurity Stocks?

Choosing leading companies rather than small firms is a simple core logic: issues involving national information security tend to be trusted by both the private sector and the government. Like insurance companies, customer funds are stored for many years, and the risk of company failure in the middle is unacceptable. Therefore, leading companies gain an advantage through reputation.

The same applies to cybersecurity stocks. Larger companies have faster technological iteration, more comprehensive protection, and more stable services. Moreover, technological leadership requires continuous investment, and bigger scale companies are more capable of burning money to maintain technological advantage.

Analysis of Three Leading Cybersecurity Stocks

Cisco Systems (CSCO): From Hardware Empire to Software Transformation

Cisco Systems is a global leader in information and communication infrastructure. In 2023, it invested $28 billion to acquire cybersecurity firm Splunk, a strategic move. Cisco’s traditional strength is in network hardware, while Splunk specializes in data security and management. The combination aims to provide end-to-end protection for enterprises—from database security to transmission security, and optimized AI-specific transmission devices.

Generative AI databases store critical enterprise data. Protecting databases alone is not enough; security during transmission is equally vital, and this is precisely Cisco’s core competency. In the long run, Cisco’s stock may not see explosive growth, but its fundamentals are solid enough to attract sustained institutional confidence.

Fortinet (FTNT): The Hidden Champion of Endpoint Defense

Fortinet was founded in 2000, mainly serving enterprises, servers, and government agencies. Government trust itself is the biggest advertisement—if the state trusts it, private enterprises will naturally follow.

Fortinet’s product line covers firewalls, intrusion prevention, anti-malware, VPN, web filtering, and more. Its FortiGate NGFW is the most widely deployed network firewall globally. The real growth point lies in the EDR (Endpoint Detection and Response) market.

Currently, antivirus penetration has reached 95%, but only 20% of users adopt EDR, indicating a market growth potential of 75%. EDR combined with AI can automatically collect data, detect anomalies in real-time, and notify teams for emergency response. This is a rigid demand for companies in the AI era. Although the stock price recently declined due to slower growth, the increasing adoption of EDR has created a buying opportunity at the lower end of the range.

Crowdstrike (CRWD): Pioneer in AI Applications

Crowdstrike has been using AI since its founding, making it a pioneer in endpoint protection. CEO George Kurtz stated that the company has been using AI for over 10 years. Compared to many current companies claiming “AI services,” CRWD’s technical accumulation and application experience are on a different level.

This first-mover advantage is crucial in enterprise decision-making. Companies aiming to grow bigger and stronger prefer experienced partners—just like Tesla would choose CRWD to expand its autonomous driving data database. The company is confident in its prospects and plans for this year’s recurring revenue (ARR) to grow by 30%.

Data speaks volumes: over 50% of Fortune 500 companies are CRWD customers, and even in the banking sector with the strictest data and fund protection, 75% of the top 20 banks are clients. As AI application scenarios continue to expand in the future, the company’s growth curve will only steepen.

Investment Logic: Going with the Trend Is the Key

The core of investing is to follow the trend. Currently, amid a global economic slowdown, only industries with certain growth can attract capital inflow. Cybersecurity stocks are gaining attention due to AI development, and this is no coincidence.

Every traffic light in smart cities will need to be connected, and future smart vehicles will communicate via 5G, representing exponential growth in data flow and defensive needs. Against this backdrop, these cybersecurity giants have the potential to deliver steady returns in the future. Investment is not just about asset appreciation but also about gaining a deeper understanding of the pulse of the times.