Analysts report that U.S. cybersecurity stocks are drawing attention as the nation strengthens its defenses following a major hacking incident.
The Wall Street Journal (WSJ) reported that the U.S. government revealed that the Chinese hacker group Salt Typhoon breached nine American telecom networks in late 2024.
According to media reports, Salt Typhoon conducted a large-scale hacking operation targeting U.S. political figures, including President Trump and Vice President Pence.
Bloomberg further reported that hackers, allegedly supported by the Chinese government, infiltrated U.S. Treasury servers and stole sensitive information.
In a letter to Congress, the Treasury Department confirmed a significant cybersecurity breach, revealing that hackers gained access via third-party software providers.
The suspected Chinese hackers reportedly breached BeyondTrust, a cybersecurity service provider for the Treasury, and remotely accessed documents from Treasury workstations.
Congress swiftly recognized the severity of the situation and acted promptly.
In a rare bipartisan effort, Republicans and Democrats agreed to introduce cybersecurity enhancement legislation, which is set to take effect in 2025.
The first such legislation, the Health Care Cybersecurity, and Resiliency Act aims to fortify defenses in the healthcare sector.
Security Intel Corporation projects that global cybersecurity spending will reach $212 billion in 2025, a 15% increase from the previous year.
NH Investment & Securities analyst Baek Chan Kyu noted that the U.S. House of Representatives calls for a 10% increase in the 2025 cybersecurity budget. Overall, government cybersecurity spending is expected to rise by approximately 8%.
Investor interest in cybersecurity firms will likely grow, fueled by increased government spending, cybersecurity company IPOs, major tech mergers and acquisitions (M&A), and rising global cybersecurity expenditures.
Cybersecurity firms, including Wiz, Cato Networks, and Netskope, are preparing for IPOs in 2025. Companies like Qualys (QYLS), Rapid7 (RPD), and Tenable Holdings (TENB) are actively pursuing M&A deals.
Market analysts observe that startups such as Snyk, Vectra AI, Arctic Wolf, Versa Networks, Noname Security, and Illumio contribute to the industry’s rapid expansion.
Baek predicts substantial cybersecurity sector growth driven by market expansion, increased government spending, new company entries, M&A activity, and President Trump’s focus on enhancing cybersecurity.
For global portfolios in 2025, Baek recommends the IT sector, particularly the cybersecurity sub-industry.
Prominent players in the cybersecurity space include Palo Alto Networks (PANW), Fortinet (FTNT), CrowdStrike (CRWD), and Cloudflare (NET). Noteworthy ETFs in this sector are CIBR, HACK, and IHAK.
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