· 1
−8.2%
since Oct 9
The idea
Security budgets are consolidating, shifting away from dozens of point tools toward a handful of big AI-powered platforms, while AI-driven attacks only add pressure to spend more with whoever can keep up. This basket leans into that shakeout: a core of consolidation winners, surrounded by cloud and network platforms, AI-native defenders, attack-surface specialists, and identity, with two sector ETFs for ballast. No single name dominates, and cash is held back to add to the core if the market overreacts to a rough quarter. The view holds over a one to two year horizon.
What it owns
- These companies are winning by bundling point products into broader platforms that replace customers' existing tools, capturing larger share of security budgets as companies simplify their vendor lists. · Palo Alto NetworksIt actively bundles point products into a platform, so the take depends on its total contract value and platform deal growth staying strong as customers consolidate onto its stack., CrowdStrike HoldingsIt started at the endpoint and keeps adding modules customers adopt instead of standalone tools, so the take needs customers to keep attaching more modules per deal., MicrosoftIt sells security as part of licenses companies already pay for, making it the default consolidation choice for many buyers, and it owns the AI infrastructure both attackers and defenders run on., FortinetIt is converting its huge firewall base into a broader platform where networking and security merge, so the take needs customers upgrading into the wider bundle rather than just renewing hardware.32%
- These companies replace legacy network infrastructure with cloud-native services, the type of infrastructure shift that frees up budgets for security consolidation across the rest of the stack. · ZscalerIt replaces the old corporate network perimeter with a cloud service, exactly the kind of legacy-tool replacement that frees budgets for consolidation, so the take watches billings growth and large-customer adds., CloudflareIt sits in front of a huge share of internet traffic and is layering security and AI services on top, so the take depends on security revenue compounding as companies simplify onto its network., Check Point SoftwareIt is the cheaper, profitable incumbent pushing its own consolidated platform, giving the take a value-priced way to own the same shift and it needs modest growth from its platform push., Akamai TechnologiesIts growth now comes from security and cloud compute rather than content delivery, so the take needs security to keep becoming a bigger share of its revenue or this position loses its reason.20%
- These companies built AI into their core defense capabilities from the start rather than bolting it on, positioning them to compete as attack sophistication driven by AI raises the stakes for security. · RubrikIt protects and recovers data after ransomware hits and is building AI-driven security on top of that data, so as a newer public company it needs fast subscription growth to justify the position., DatadogIt watches everything running in a company's cloud and is extending that visibility into security, fitting the fewer-vendors story, so it must keep converting monitoring customers into security customers., SentinelOneIt built defense around AI from day one and competes directly with consolidation leaders at lower prices, a higher-risk bet that needs to keep growing fast and moving toward profit.14%
- These companies help companies find and fix exposures before attackers exploit them, a job that becomes more urgent as AI-generated attacks probe networks faster and at scale. · QualysIt tells companies where they are exposed before attackers find it, a job that gets more urgent as AI-generated attacks make the exposure map change faster, and it does this while staying profitable., Tenable HoldingsIt maps everything a company exposes to the internet, a job that grows as AI lets attackers probe faster, so the take watches whether its broader exposure-management platform keeps winning deals., Varonis SystemsIt secures data itself by flagging who can touch what, which matters more as companies feed sensitive data into AI tools, so its shift to cloud subscription needs to keep converting customers.10%
- These ETFs hold the broad cybersecurity sector, so the take still benefits if security spending rises even if a different vendor than expected wins consolidation, capping damage from individual stock picks. · First Trust NASDAQ Cybersecurity ETFIt holds the broad cybersecurity sector, so the take still benefits if security spending rises even if a different vendor wins consolidation, and it caps damage from individual picks being wrong., Amplify Cybersecurity ETFIt is the second sector ETF spreading ballast across two fund providers with slightly different holdings, keeping the take alive on broad spending trends even if individual picks miss.9%
- Identity is where most modern attacks start, so consolidation requires a serious identity layer independent enough to stay competitive as larger platforms try to bundle it in. · OktaIt is the biggest independent identity provider at a time when consolidating buyers need a serious identity layer, so the take depends on it keeping identity budgets rather than losing them to larger bundles.5%
- Cash10%