−8.8%
since Oct 8
The idea
Security budgets are consolidating: companies are ditching dozens of point tools for a handful of big AI-powered platforms, and AI-driven attacks are pushing spending toward whoever can keep pace. This basket targets the likely winners of that shakeout rather than the sector as a whole, with a core in consolidation leaders, layers in cloud, network, identity, AI-native defense, and attack-surface tools, plus sector ETFs for ballast. No single name dominates, the horizon is one to two years, and cash is held back to add to the core if a quarter's panic makes it cheaper.
What it owns
- These companies are bundling security tools into platforms that replace point products, the core dynamic this take expects to drive growth. · Palo Alto NetworksIt bundles security tools into platforms designed to replace customers' point products, making module adoption per deal the signal that consolidation is working., CrowdStrike HoldingsIt started at the endpoint and keeps adding modules customers adopt instead of standalone tools, so growth depends on customers attaching more modules per deal., MicrosoftIt sells security as part of licenses most companies already pay for, making it the default consolidation choice, and it owns the AI infrastructure both defense and attack run on., FortinetIt is converting its huge firewall base into a broader platform where networking and security merge, so customers need to upgrade into the wider bundle rather than just renew hardware.32%
- These companies replace legacy network perimeters and security infrastructure with cloud services, capturing budgets that shift away from older tools. · ZscalerIt replaces the old corporate network perimeter with a cloud service, the type of legacy-tool replacement that typically draws budget funding as enterprises modernize their security infrastructure., CloudflareIt sits in front of huge internet traffic and layers security and AI on top of that position, so the bet is that security revenue keeps compounding as companies simplify onto its network., Check Point SoftwareIt is the cheaper, profitable incumbent pushing its own consolidated platform, giving this take a value-priced way to own the same shift if growth follows the platform push., 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 hold.20%
- These companies built security and visibility around AI from the start, positioning them to capture budgets as AI raises the stakes in both offense and defense. · RubrikIt protects and recovers data after ransomware hits and is building AI-driven security on top of that data, requiring fast subscription growth as AI raises the stakes for recovery spending., SentinelOneIt built its defense around AI from day one and competes directly at lower prices, so it needs to keep growing fast and moving toward profit or risk missing the consolidation wave., DatadogIt watches everything running in a company's cloud and extends that visibility into security, so it needs to keep converting monitoring customers into security customers.14%
- These companies map and secure what companies expose to the internet, a job that grows more urgent as AI enables faster probing and data becomes more central to operations. · Tenable HoldingsIt maps what companies expose to the internet, a job that grows as AI lets attackers probe faster, so its broader exposure-management platform needs to win deals beyond basic scanning., Varonis SystemsIt secures data itself by flagging who can touch what, which matters more as companies feed sensitive data into AI tools, and it needs to keep converting customers to its cloud subscription model., QualysIt tells companies where they are exposed before attackers find vulnerabilities, a map that becomes more urgent as AI enables faster attacks.10%
- These ETFs hold the broader cybersecurity sector, so the take benefits from overall security spending growth even if individual stock picks underperform. · First Trust NASDAQ Cybersecurity ETFIt holds the broad cybersecurity sector, providing benefits if security spending rises regardless of which vendor wins consolidation., Amplify Cybersecurity ETFIt holds the broad cybersecurity sector with different holdings than other sector ETFs, providing benefits if security spending rises regardless of individual stock performance.9%
- Identity is where most modern attacks begin, making it essential to consolidation strategies. · OktaIt is the largest independent identity platform, which consolidating buyers need as a serious layer, so it must keep winning identity budgets rather than losing them to Microsoft's bundle.5%
- Cash10%