Investors are betting the AI boom won’t replace cybersecurity software—it will fuel its next growth cycle. Following a record quarterly report from CrowdStrike Holdings Inc. (NASDAQ:CRWD), a sector-wide rally in cybersecurity ETFs signals that Wall Street is pricing in a massive wave of AI-driven security spending.
CrowdStrike’s shares surged more than 19% Thursday, lifting the broader cybersecurity complex. The First Trust Nasdaq Cybersecurity ETF (NASDAQ:CIBR) gained about 7.6% at one point, and the Amplify Cybersecurity ETF ARCA:HACK) gained more than 8%.
The ETF rally is important because it shows investors are not simply rewarding one company’s earnings beat. They are increasingly pricing in a broader AI-driven cybersecurity spending cycle.
CIBR, HACK Become Key AI-Security Plays
Both funds offer investors diversified exposure to the companies positioned to benefit from that trend.
The CIBR ETF holds 42 securities, with Palo Alto Networks, Inc. (NASDAQ:PANW) accounting for 9.17% of the portfolio. CrowdStrike and Fortinet, Inc. (NASDAQ:FTNT) are also among its largest positions, while other major cybersecurity names include Zscaler, Inc. (NASDAQ:ZS) and Okta, Inc. (NASDAQ:OKTA). These names are all surging on Thursday, with PANW up 14%, FTNT and ZS up more than 9% each, and OKTA up 29%.
Meanwhile, HACK offers another diversified route. HACK tracks an index of 23 companies involved in cybersecurity hardware, software and services and was the first dedicated cybersecurity ETF when it launched in 2014. All the big names in this space are a part of the holdings in this fund as well.
The fund was up more than 8% on Thursday.
That makes the funds particularly relevant following Thursday’s earnings-driven rally.
CrowdStrike reported $1.47 billion in quarterly revenue, up 25.8% year over year, while annual recurring revenue reached $5.84 billion. Net new ARR hit a record $333 million.
But the more important development for the cybersecurity ETF trade is what is happening underneath those numbers.
AI agents are creating new digital identities, permissions, endpoints and connections to corporate systems. Those systems must be authenticated, monitored and protected, potentially expanding cybersecurity demand rather than replacing it.
CrowdStrike has already moved into this market. In June, the company unveiled Continuous Identity for AI Agents, designed to continuously assess and authorize AI-agent activity based on ownership, calling identity and real-time risk.
The Rally Is Bigger Than CrowdStrike
The read-through is already spreading across the sector.
Okta shares jumped sharply after its earnings report, while Zscaler and SentinelOne, Inc. (NYSE:S) also rallied on Thursday. Palo Alto Networks and other cybersecurity stocks joined the broader move.
That breadth matters for ETFs.
Rather than trying to determine which individual cybersecurity company will capture the largest share of AI-security spending, funds such as CIBR give investors exposure across endpoint security, cloud security, identity protection, network security and other parts of the cybersecurity stack.
AI Could Expand the Cybersecurity Addressable Market
The more autonomous AI becomes, the more access enterprises are likely to give software agents. Those agents can interact with applications, databases, cloud environments and other agents at machine speed, creating a new layer of security risks.
CrowdStrike’s results provide an early indication that companies are willing to pay for protection against those risks.
For cybersecurity ETFs, that could be the bigger opportunity: AI may not disrupt cybersecurity spending. It could become one of the forces driving the industry’s next growth cycle.
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