Thus far, the artificial intelligence boom rewarded the companies supplying the necessary computing power. Semiconductors, servers, networking equipment and data centers became the market’s primary focus as technology companies raced to build AI infrastructure.
The next phase may reward the companies responsible for protecting it.
In an increasingly digital economy, cybersecurity has become a foundational piece of modern business infrastructure. These companies often benefit from recurring revenue, attractive margins and powerful secular growth drivers. AI is now adding another catalyst by creating more data, applications, cloud workloads and digital identities that must be secured.
Yet a strong industry does not always produce strong stock returns. The post-pandemic software boom pulled years of expected growth forward, as aggressive spending, easy financial conditions and enthusiastic positioning pushed valuations to unsustainable levels. When growth normalized and interest rates rose, those multiples compressed sharply.
The damage was especially severe for Okta (OKTA) and SentinelOne (S), both of which remain well below their prior-cycle highs. Fortinet (FTNT), by comparison, has traded much better and already demonstrated that it can compound through a difficult software environment.
Now, the investment setup appears to be improving. AI is strengthening the industry’s long-term demand outlook, valuations have moved closer to historical norms and earnings estimates are rising. Fortinet currently carries a Zacks Rank #1 (Strong Buy), while SentinelOne and Okta each hold a Zacks Rank #2 (Buy), indicating positive earnings-estimate momentum across three very different areas of cybersecurity.
Image Source: Zacks Investment Research
Why Cybersecurity Could Be AI’s Next Major Investment Theme
AI creates a powerful two-sided catalyst for the cybersecurity industry.
On one side, enterprise adoption is expanding the attack surface. Every new AI application can introduce additional models, cloud workloads, databases, devices and connections that must be monitored and protected. The growth of autonomous AI agents could be particularly important, as businesses will need to control which systems, applications and sensitive information those agents are permitted to access.
On the other side, AI is making cyberattacks more scalable. The same tools that improve the productivity of software developers and security teams can help criminals automate phishing campaigns, identify vulnerabilities and execute increasingly sophisticated attacks. Fortinet has already described the threat environment as becoming more complex and intensified by AI, while its research has identified agentic AI as an emerging enabler of large-scale data theft.
