Global Cybersecurity Market Outlook

The cybersecurity industry has been growing rapidly over the past few years, driven by the increasing frequency and sophistication of cyber threats and the growing importance of digital security for businesses and individuals alike.

According to an IBM Institute report, the average total cost per data breach in 2022 was $4.35 million on a global scale. The U.S. breaches were the most expensive at $9.44 million.

The COVID-19 pandemic has also impacted the cybersecurity industry, as the shift to remote work has created new cybersecurity challenges and increased the need for secure remote access solutions.

This has led to a rise in investments in remote work solutions and cybersecurity companies that offer products and services to address these challenges.

Adoption of Cloud Security Solutions

One trend in the industry is the increasing focus on cloud security. The shift to remote work, accelerated by the COVID-19 pandemic, has increased the need for secure remote access solutions and cloud-based security solutions, as employees are accessing sensitive data and systems from home networks.

As a result, there has been an increased demand for cybersecurity products and services that cater to the needs of remote workers and protect against cyber threats that are targeting remote workers.

We’ve seen resilient growth from some of the top cybersecurity companies (CrowdStrike (CRWD), Palo Alto Networks (PANW), Cisco (CSCO)) in their breadth of cloud-based security products.

According to a report by MarketsandMarkets, the cloud security market is anticipated to grow from $40.8 billion in 2022 to $77.5 billion by 2026, with a predicted CAGR of 13.7% over the forecast period.

Artificial Intelligence (AI) and Machine Learning (ML)

Another growth trend is the advances in AI and ML. These advances have had a significant impact on the cybersecurity industry, transforming the way organizations approach cyber security.

There are multiple ways we’ve seen these impacts: enhanced threat detection, improving incident responses, better fraud detection, increased efficiency, more accurate threat intelligence, all of which are just scratching the surface.

A report done by Acumen Research and Consulting, predicted the global market for AI-based cybersecurity products to reach $133.8 billion by 2030 up from $14.9 billion in 2021.

Overall, AI and ML have transformed the cybersecurity industry, providing organizations with new tools and capabilities to better protect their systems and data.

As cyber threats continue to evolve, AI and ML will likely play an increasingly important role in helping organizations stay ahead of the curve and minimize the risk of a successful cyber attack.

Internet of Things (IoT)

The growth of IoT devices has had a significant impact on the cybersecurity industry. It has presented both challenges and opportunities for cybersecurity companies.

While the proliferation of connected devices has expanded the attack surface which increases the risk of cyber threats, it also creates a growing demand for IoT security solutions and a greater focus on device management, data privacy, and collaboration between cyber security companies and IoT manufactures.

Cybersecurity Budgets

The trend of increased spending on cybersecurity by companies indicates a strong and growing demand for cybersecurity solutions. A report done by ESG global research found that in 2023, 52% of organizations are increasing their spending on IT, while 65% of the organizations had plans to increase spending specifically on cybersecurity.

The increased trend bodes well for the future of the cybersecurity industry, as the threat landscape continues to evolve, cybersecurity companies will need to innovate and adapt to meet the changing needs of their customers, but the demand for their services is likely to remain strong.

Investment Opportunity in Cybersecurity

The cybersecurity industry is growing rapidly and is expected to continue growing in the coming years. Driven by the increasing frequency and sophistication of cyber threats, the adoption of cloud security solutions, growth of IoT security, innovation of AI and ML, and the growing demand for cybersecurity solutions seen through increased spending. ETFMG Prime Cyber Security ETF (HACK) offers a diversified global portfolio to gain access to the cybersecurity industry.

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-800-889-1438), or by visiting www.etfmg.com/HACK. Read the prospectus carefully before investing.

Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The fund is concentrated in technology-related companies that face intense competition, both domestically and internationally, which may have an adverse effect on profit margins. Such companies may have limited product lines, markets, financial resources or personnel. The products of such companies may face obsolescence due to rapid technological developments, frequent new product introduction, unpredictable changes in growth rates, competition for the services of qualified personnel, and competition from foreign competitors with lower production costs. Technology companies are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Funds are non-diversified, meaning they may concentrate its assets in fewer individual holdings than a diversified fund. Investments in smaller companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Diversification does not assure a profit or protect against a loss in a declining market. The Fund’s return may not match or achieve a high degree of correlation with the return of the Prime Cyber Defense Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Prime Cyber Defense Index.

ETF Managers Group LLC is the investment adviser to the Fund.

The Fund is Distributed by ETFMG Financial, LLC, Member FINRA/SIPC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.

The Fund is intended to be made available only to U.S. residents. Under no circumstances is any information provided on this website intended for distribution to or use by, or to be an offer to sell to or solicitation of an offer to buy the Fund or any investment product or service of, any person or entity in any jurisdiction or country, other than the United States, where such distribution, use, offer or solicitation would subject the Fund or its affiliates to any registration requirement or be unlawful under the securities laws of that jurisdiction or country.

Original Post

 

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.