24/7 Wall St. reports that the First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) gained ~13 percent in 2025, trailing the Nasdaq-100 by nearly 7 percentage points. This underperformance comes as AI-enabled threats are expected to drive unprecedented demand for cybersecurity solutions in 2026, making for a unique opportunity right now.
Cybersecurity Ventures projects global spending on security products and services will exceed $520 billion in 2026, up from $260 billion in 2021. Much of this acceleration stems from what Harvard Business Review describes as a “surge in AI agent attacks” where adversaries exploit the identity crisis created by deepfakes and synthetic identities that can command automated systems in real time.
Watch quarterly earnings calls from CIBR’s largest holdings. Palo Alto Networks, CrowdStrike (NASDAQ:CRWD), and Cloudflare (NYSE:NET) collectively represent nearly 20 percent of the portfolio, and their commentary on AI security spending provides the clearest signal of whether enterprise budgets are shifting toward agentic defense. Revenue growth acceleration above 25 percent in these names would validate the thesis that 2026 marks an inflection point.
CIBR’s $11.1 billion in assets makes it five times larger than competitor HACK, providing superior liquidity. The fund’s 36 holdings offer broader diversification than pure-play alternatives, including exposure to defense contractors like Leidos (NYSE:LDOS) and Booz Allen Hamilton (NYSE:BAH) that capture government cybersecurity budgets. Federal spending on cyber defense exceeds $25 billion annually and is growing as nation-state threats intensify.
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