The AI Opportunity in Cybersecurity

AI has been fuelling a rise in cyberattacks; in parallel to this, AI has become a critical element of cybersecurity. Here is a collection of AIcybersecurity stocks to keep an eye on.

  • Cloudflare has unveiled a firewall for generative AI, designed to protect large language models from attacks.
  • Tenable has launched new features for its exposure management platform, including an AI assistant.
  • Zscaler is acquiring the start-up Avalor to provide customers with AI-powered security analysis.


The Dell Partnership Stock

CrowdStrike [CRWD] announced earlier this month that it had expanded its partnership with Dell [DELL] to offer its AI-based Falcon XDR platform through the latter’s managed detection and response (MDR) service. “The Falcon platform has quickly become the market’s cybersecurity platform of record. By expanding our strategic alliance with Dell to power their MDR services, we’re gaining access to more customers to bring them industry-leading protection,” said CrowdStrike Chief Business Officer Daniel Bernard in a press release. CrowdStrike’s share price is up 136.4% in the past 12 months and up 23.6% year-to-date as of 18 March.


The LLM Firewall Stock

Cloudflare [NET] earlier this month unveiled a firewall for generative AI, designed to protect large language models (LLMs) from cyberattacks by detecting potential exploits before they happen. At the same time, the company announced Defensive AI, a tool that uses AI to analyse websites for potential AI-based threats. “Fighting AI with AI is now a non-negotiable,” said Cloudflare CEO Matthew Prince in a press release. The Cloudflare share price is up 65% in the past 12 months and up 10% year-to-date.


The Generative AI Service Stock

Tenable [TENB] said last week that it’s enhancing ExposureAI, its generative AI service available through the company’s exposure management platform, to increase the capabilities of cybersecurity teams. New features allow customers to summarise how attacks occurred, ask an AI assistant questions about past attacks, and receive guidance on how to mitigate risk. This “takes the guesswork out of the process and saves invaluable time in recommending the exact path to remediation,” said Tenable Chief Technology Officer Glen Pendley in a press release. The Tenable share price is up 2.7% over the past year and flat year-to-date.

Akamai Technologies

The AI Workload Stock

Akamai [AKAM] is partnering with Neural Magic, a developer of software designed to accelerate AI workloads. In an announcement last week, the two parties said that the collaboration will help deep-learning models to be run more efficiently and at a lower cost. “We intend to make AI smarter and faster,” said Ramanath Iyer, Chief Strategist at Akamai. Neural Magic is now an Akamai Qualified Computing Partner, which means the software is available through Akamai’s cloud infrastructure platform. Akamai’s share price is up 47.8% over the past year, but down 9.4% year-to-date.


The AI Start-up Acquisition Stock

Zscaler [ZS] has announced the acquisition of Israeli start-up Avalor for a reported $350m, to strengthen its ability to provide customers with AI-powered security analysis and decision-making. In a press release issued last week, Zscaler CEO Jay Chaudhry explained that the company “operates the world’s largest security cloud with the most relevant data to train security-specific LLMs”, and that the acquisition will enable Zscaler to “effectively identify vulnerabilities, while predicting and preventing breaches”. The Zscaler share price is up 79.4% over the past year, but down 12.4% year-to-date.

Another Way to Invest in Cybersecurity and AI

First Trust Nasdaq Cybersecurity ETF

The First Trust Nasdaq Cybersecurity ETF [CIBR] holds all five stocks as of 15 March. Software accounts for 55.1% of the portfolio, while information technology (IT) services and communications equipment have weightings of 15.1% and 11.1%, respectively; professional services, semiconductors and aerospace and defence have single-digit allocations. The fund is up 37.8% in the past year and up 4.2% year-to-date.

The Global X Cybersecurity ETF [BUG] holds CrowdStrike, Tenable and Zscaler. As of 29 February, IT accounts for 93.7% of the portfolio, with communication services making up 6.3%. The fund is up 33.6% in the past year and up 1.4% year-to-date.

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