This has been another eventful year on the cybersecurity front. Investors need not look any further than the Las Vegas Strip for confirmation of that.
Ransomware attacks were carried out earlier this year on Caesars Entertainment (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM), among other well-known corporations. Those are among the reasons the WisdomTree Cybersecurity Fund (WCBR) is higher by almost 63% and residing around 52-week highs.
The ETF is outpacing the tech-heavy Nasdaq-100 Index (NDX) and the S&P Information Technology Index by wide margins this year. There are no guarantees WCBR will surge another 63% next year. But it has some favorable long-term tailwinds for investors to evaluate.
WCBR Could Be a Long-Term Winner
The long-term outlook for the technology sector is compelling. But growth forecasts aren’t linear across the space. That means some industries, such as cybersecurity, may well outpace other tech segments.
Data confirms an attractive trajectory for cybersecurity. That implies potential upside for ETFs such as WCBR. For example, Gartner recently noted cybersecurity spending could top $215 billion in 2024. That’s a 14.3% boost from this year’s expenditures.
“The continuous adoption of cloud, continuous hybrid workforce, rapid emergence and use of generative AI (GenAI), and the evolving regulatory environment are forcing security and risk management (SRM) leaders to enhance their security and risk management spending,” said Shailendra Upadhyay, senior research principal at Gartner.
Safeguarding customer data and avoiding reputational risk are among the primary cybersecurity objectives for companies across a variety of industries. So spending on data privacy and cloud security is expected to surge next year. That would outpace broader cybersecurity spending growth.
“Privacy remains a top organizational priority as regulations that impact the processing of personal data continue to emerge, including those related to the use of AI. Gartner predicts that by 2025, 75% of the world’s population will have its personal data covered by modern privacy regulations,” added the research firm.
Other growth areas for cybersecurity expenditures next year are expected to include consulting, IT outsourcing, implementation, and hardware support. Some WCBR holdings address cybersecurity in those niches. Bottom line: Cybersecurity spending isn’t optional, and preventative measures are usually more cost-effective than reactive measures.
“In light of cyber risks increasing, cyberthreats proliferating and a changing operating environment, it is more critical than ever for organizations to build and optimize a cybersecurity program,” said Upadhyay. “It is the cornerstone of cybersecurity initiatives which help SRM leaders secure new environments, protect against the expanded attack surface, consume security capabilities in new ways and create better efficiencies through automation.”
For more news, information, and analysis, visit the Modern Alpha Channel.