−8.3%
since Oct 9
The idea
I believe security budgets are consolidating: companies are ditching dozens of point tools for a handful of AI-powered platforms, while AI itself makes attacks nastier and pushes spending toward vendors who can keep pace. So this basket leans into the platform leaders taking share, surrounds them with cloud, identity, and attack-surface specialists riding the same shift, and uses two sector ETFs as ballast so one bad earnings report can't sink it.
What it owns
- These companies are winning by bundling multiple security tools into platforms that replace point products, consolidating vendor sprawl and wallet share. · Palo Alto NetworksIt bundles tools together and pursues platform deals that grow total contract value, making customer consolidation onto its platform central to revenue growth., CrowdStrike HoldingsIt started as an endpoint tool and keeps adding modules customers attach instead of buying separate products, with module adoption per deal the key signal., MicrosoftIt sells security as part of licenses companies already buy and owns the AI infrastructure both attackers and defenders run on, so it benefits if its security business outgrows the sector., FortinetIt is converting its large firewall installed base into a broader platform where networking and security converge, needing customers to upgrade into the wider bundle.32%
- These companies are replacing legacy network perimeters and infrastructure with cloud-native services that combine security with core connectivity. · ZscalerIt replaces the old corporate network perimeter with a cloud service, exactly the legacy replacement this take expects budgets to fund, with large customer adds showing adoption., CloudflareIt sits in front of major internet traffic and layers security and AI services on top, so it needs security revenue to keep compounding as companies simplify their stacks., Akamai TechnologiesIts growth now comes from security and cloud compute rather than content delivery, so security must keep becoming a bigger share of revenue for this pivot to matter., Check Point SoftwareIt is a cheaper, profitable incumbent pushing its own consolidated platform, giving the take a value-priced way to own the consolidation shift with modest growth.20%
- These companies built security around AI from the ground up and are extending their platforms to compete across multiple threat vectors. · RubrikIt protects data after ransomware hits and is building AI-driven security on top of that position, so it needs fast subscription growth as AI raises the stakes on recovery., SentinelOneIt was built around AI from day one and competes directly with larger consolidation plays at lower prices, but needs to keep growing fast and move toward profit., DatadogIt watches everything running in cloud environments and is extending visibility into security to fit the fewer-vendors story, needing to convert monitoring customers to security.14%
- These companies help enterprises find and fix exposures before attackers exploit them, a job that becomes more urgent as AI accelerates threat speed. · Tenable HoldingsIt maps everything a company exposes to the internet, a job that grows larger as AI accelerates attacks, so its broader platform must keep winning deals beyond basic scanning., QualysIt maps where companies face exposure to attackers, and the urgency of that visibility persists even as security budgets consolidate elsewhere., Varonis SystemsIt secures data itself by flagging who can access what, work that matters more as companies feed sensitive data into AI tools, with the shift to cloud subscriptions key to success.10%
- These ETFs hold broad cybersecurity sector exposure to benefit from rising security spending even if individual consolidation plays underperform. · First Trust NASDAQ Cybersecurity ETFIt holds broad cybersecurity sector exposure to benefit if security spending rises even when different vendors win the consolidation race., Amplify Cybersecurity ETFIt holds broad cybersecurity sector exposure across a different fund provider to benefit from rising security spending even when individual consolidation picks miss.9%
- Identity is the attack surface most breaches exploit, so consolidating buyers need independent identity platforms alongside their security bundles. · OktaIt is the largest independent identity platform and must keep winning identity budgets from consolidating buyers rather than losing them to Microsoft's bundle.5%
- Cash10%