Cybersecurity stocks to benefit as big tech plans big spending
Biden is calling all the help he can get to deal with America’s most pressing issue – cybersecurity. Last Wednesday, top US business leaders met with President Joe Biden to discuss strengthening the nation’s networks – with tech companies committing billions to the issue.
“The issue of the decade”
Due to the high-profile attacks this past year, cybersecurity’s been a hot topic:
- Russian hackers infiltrated 18,000 businesses and government agencies via a software update from the company SolarWinds.
- Hackers shut down Colonial Pipeline’s infrastructure, forcing its CEO, Joseph Blount, to pay up a $4.4m ransom.
The attack on Colonial promptly led to President Biden signing an executive order to improve the nation’s cybersecurity. But the government can’t improve do it alone – so it turned to its friends:
- CISA, the government’s cybersecurity agency, unveiled the Joint Cyber Defense Collaborative – an agreement between the government and the nation’s biggest tech companies to improve cybersecurity.
- The Collaborative aims to build new industry standards and provide skills training to fill the ~500,000 open cybersecurity jobs in the US.
Tech leaders, assemble
Wednesday’s meeting showed just how seriously big tech is taking cybersecurity threats, with huge commitments from…
- Google, which pledged $10b over five years to strengthen cybersecurity.
- Microsoft, which committed $20b over five years to deliver more advanced cybersecurity tools.
Other industry leaders like Apple, Amazon, and IBM also made commitments, either with training or improving infrastructure.
Looking ahead: The bill will be taken up by the House after having passed the Senate.
Investors: Strengthen your portfolio security
With billions flowing into the sector and the backing of the government, cybersecurity is the industry to watch right now – and cybersecurity companies are reaping the benefits:
- Palo Alto Networks (NYSE:PANW) is up 30% in 2021 after announcing strong earnings last week — expects record sales in 2021.
- Crowdstrike (NASDAQ:CRWD) is up 40% this year with strong momentum from its NASDAQ-100 addition last week and several analyst upgrades yesterday.
The ETF way: The First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR), which tracks the cybersecurity industry as a whole, is up over 18% on the year.
Between the massive government support and the growing fear of hacks, the cybersecurity sector has the wind at its back.