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How and Why Invest in Cybersecurity Companies on the Stock Market?

How and Why Invest in Cybersecurity Companies on the Stock Market?

Guessing what the next most profitable investment will take work. Experts study the evolution of the market to assess which companies can grow in the coming years, and even so, they can be wrong. However, there is a booming sector that is worth investing in cybersecurity.

Importance of cybersecurity

Cyber threats have multiplied exponentially in recent years. It is a growing problem where massive attacks against companies or security systems are launched daily on the network trying to bypass these security barriers. They are mainly attacks classified into five different types, which are:

  • Distributed Denial of Service (DDoS) attacks
  • File hijacking attacks on hard drives or portable devices
  • CEO fraud, the identity of the CEO is impersonated
  • Theft of personal data

As if that were not enough, the pandemic forced governments to confine the majority of the population, which meant that many companies had to adapt quickly to the new situation to maintain their productivity. In this context, many began to establish the teleworking modality.

With the pandemic almost everywhere over the world, remote work is here to stay, which has led many companies to go digital. For this reason, ensuring your online security is more important than ever, so the cybersecurity industry is booming.

What is cybersecurity?

Cybersecurity is a branch of computing dedicated to protecting all our information, assets and digital devices, that is, all computing infrastructure. Companies have a large amount of digitized data that, in the wrong hands, can lead to disastrous consequences.

As digitisation grows, so does cybercrime, a criminal practice of hacking into company systems to steal data or introduce malware (computer viruses) that bring down the system.

However, cybersecurity is dedicated to protecting the digital infrastructure from criminals and human or electronic errors that may damage its operation.

In short, cybersecurity is essential for any digitised company. Considering that more businesses are growing, it is logical that it is a sector currently in total growth.

Why invest in cybersecurity companies on the stock market?

There are many reasons to invest in cybersecurity companies on the stock market, starting with the fact that, as we have already said, it is a booming sector. There is some reluctance because cybersecurity is within the technology industry, and companies must go through the best moments on the stock market.

However, we must remember that bearish cycles can be long-term opportunities. To dig a little deeper into this, let’s see why the demand for cybersecurity is expected to continue to grow:

Cyber threats are on the rise

Since the coronavirus pandemic began, cybercrime has only been on the rise. More and more companies suffer some type of attack and, therefore, more often require the services of cybersecurity companies.

As digitalisation increases, so are attacks, taking advantage of weak points in remote connectivity, the number of devices outside of work, etc. If an employee from home clicks on a simple link, it can be disastrous for the system, so you must find a way to block them.

The number of cyberattacks in the world is growing

Cybersecurity in companies: The importance of protecting business intellectual property

It is essential that all businesses invest in the protection of their accounts, as well as their intellectual property, precisely because of the previous point. Remember that data theft is not the only danger a business is exposed to since a hacker can enter the system and carry out an action that damages the company’s reputation.

In this sense, the demand for cybersecurity services will continue to grow, since it has never been as crucial as it is now to protect companies’ digital systems.

For example, throughout 2022, most cyber threat crimes against US companies were related to phishing (38%) and network intromission (32%).

Companies must comply with cybersecurity regulations

This is the most compelling reason for companies to contract the services of the cybersecurity sector. There is a law, known as the security quality of information, an area with clear regulations that businesses must abide by.

Among them are some regulations, such as the General Data Protection Regulation in Europe or the SOX law in the US. In other words, another reason to continue hiring the services of security specialist companies and these continue to increase their billing.

Cybersecurity as a matter of national interest and strategy

States need more significant investment in cybersecurity due to the constant increase in cyberattacks affecting government systems and the sensitive information they possess.

These cyberattacks can cause considerable damage to critical state infrastructure, such as energy, transportation, or communications systems, and compromise national security and the confidentiality of government information.

For example, in the year 2022, the security of the data of senior officials of the Government of Spain was compromised when the Pegasus spyware infiltrated the mobile phones of leading national politicians, such as the President of the Government himself.

Therefore, governments must invest in cybersecurity to protect their systems and data from cyberattacks. For this reason, we will see large amounts of the public budget destined to develop a national cybersecurity strategy in the future.

Cybersecurity, a growing industry

In this way, and for all that has been said, cybersecurity will be a sector that will continue to grow, and possibly exponentially, throughout this decade.

According to a recent report by P&S Intelligence, the global cybersecurity market will reach 433,000 million dollars in 2030, more than 250% of its turnover in 2021.

And it is that as the digital transformation of many companies that do not even have a website becomes a reality, the result of the generational change, we will see the business figures of this market increase at a much higher rate.

How to invest in cybersecurity companies on the stock market?

From all of the above, we deduce that the cybersecurity sector is very interesting in investing. We have verified that it is booming, and the forecast is that it will continue to grow due to technological advances and the increasing adoption of remote working modalities.

How can I do it if I want to invest in cybersecurity?

There are several ways, as happens with almost all types of investment, but all of them consist of buying shares of companies dedicated to this sector. This purchase can be direct, acquiring the shares of specific companies through your trusted broker.

But in addition, it can be indirect since it is possible to invest through investment funds or ETFs on cybersecurity, which has a wide range of companies in the sector in their portfolio. It’s a good idea if you’re interested in the industry but have yet to study its various companies.

In conclusion, investing in cybersecurity is increasingly important due to the growing number of cyberattacks affecting companies and states worldwide. Furthermore, with the increasing reliance on digital technologies in our daily lives, the demand for cybersecurity services will likely continue to grow.

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