The imperative to protect increasingly digitized businesses, governments, schools, Internet of Things (IoT) devices, and industrial control systems (ICS), as well as semiconductors, medical devices, gaming systems, cars, ships, planes, drones, trains, ATMs, and consumers from cybercrime will propel global spending on cybersecurity products and services to $1 trillion (USD) annually by 2031, according to the “2026 Cybersecurity Market Report” from Cybersecurity Ventures in partnership with Evolution Equity Partners.
“In 2004, the global cybersecurity market was worth just $3.5 billion,” says Steve Morgan, founder of Cybersecurity Ventures, “and now it’s one of the largest and fastest-growing sectors in the information economy.”
KEY STATISTICS
Cybersecurity Ventures predicts that global spending on cybersecurity products and services will exceed $520 billion annually (USD) by 2026, up from $260 billion in 2021.
AI is expanding a $2 trillion total addressable market (TAM) for cybersecurity providers, according to a 2024/2025 study by McKinsey.
Today, nearly 15 percent of (corporate) cybersecurity spending comes from outside the chief information security office (CISO), and non-CISO cyber spending is expected to grow at a 24 percent CAGR over the next three years, according to McKinsey.
The U.S. and Western Europe will account for more than 70 percent of global information security spending in 2025, according to IDC.
Microsoft in fiscal 2025 generated around $37 billion in cybersecurity revenue, representing about 14 percent of its total revenue, according to Investing.com, and its security business can reach $50 billion by 2030 if it grows at a mid-teens CAGR.
The U.S. spends more than $25 billion on cybersecurity every year to defend federal systems against increasing threats from hackers, ransomware groups and state-sponsored actors, according to Palo Alto Networks.
Cybersecurity Ventures predicts that cybercrime will cost the world $10.5 trillion USD in 2025, up from $6 trillion in 2021, and $3 trillion in 2015.
MARKET OBSERVATIONS
Part of the reason why those (cybercrime) losses are so high, according to Adam Evans, Royal Bank of Canada’s SVP and CISO, is that businesses too often underestimate the risks, and too often under-invest in protecting themselves.
“One of the areas that is extremely compelling is the opportunity to build a security layer around agentic AI,” says Richard Seewald, founder and Managing Partner at Evolution Equity Partners. “If you think about the volume of agents that will be put into the market, the opportunity to create cybersecurity companies that defend and protect that layer are significant.”
“We are still in the early innings of a secular trend in the cybersecurity space that involves increased spend by large enterprises, smaller businesses and consumers alike, a rapidly expanding attack surface, market consolidation and demand for next generation products and services that makes this a very compelling segment for investment,” says Dennis Smith, founder and Managing Partner at Evolution Equity Partners.
MORE THAN INFOSECURITY
Historic analyst reports are rooted in ‘IT security’ (servers, networking gear, data centers and IT infrastructure, PCs, laptops, tablets, and smartphones) and not fully evolved to ‘cybersecurity,’ which includes non-computer devices and non-IT centric platforms and environments — which covers entire sub-markets, i.e. aviation security, automotive security, IoT security, and IIoT (Industrial Internet of Things) security. All of those market segments, plus others, combine to make up the cybersecurity market, the way Cybersecurity Ventures sees it.
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