Why Wall Street Had the Future of AI Backwards

When AI-powered hackers are able to breach 600 firewalls within weeks, you’d expect cyber stocks to soar. Instead, the Global X Cybersecurity ETFBUG

has slumped 15% this year amid a broader risk-off shift. Now, analysts believe Wall Street was wrong, seeing security as “the next multibillion [dollar] … opportunity.”

• Investors dumped software over AI replacement fears — plunging cybersecurity names like CrowdStrikeCRWD
  , Palo AltoPANW
  , and SentinelOneS
  by double digits YTD.
• But a growing thesis points to AI agents making attacks easier — with hackers already scaling operations against dozens of countries and government agencies.

The premium contrarian: As momentum builds and budgets shift toward next-generation defenses, analysts have flipped the script. Arete Research upgradedPANW

from a sell to a buy rating, andCRWD

is also seeing fresh upgrades. Still, the valuation tension is hard to ignore — even after the sell-off, the latter trades at 78x forward earnings, and Significance Capital’s investment chief doubts that security stocks will ever return to past multiples. These leaders aren’t bargains, but the firm insists they remain the “best house in a bad [software] neighborhood.”