Wedbush expects demand for cybersecurity to grow because of AI. What stocks is he betting on?

Wedbush analysts believe that the mass adoption of artificial intelligence is launching a new industrial era, and the cybersecurity sector will be one of its main beneficiaries. Their favorites include Palo Alto Networks, CrowdStrike, Zscaler and other technology companies that can protect businesses from increasingly sophisticated digital threats.

Wedbush believes that the development of artificial intelligence is strengthening the demand for the cybersecurity sector's services and becoming an additional driver of its growth, writes Seeking Alpha. 

With the emergence of Agentic AI systems, the AI market is accelerating even more, and with it, the scale and complexity of cyberattacks are increasing, analyst Dan Ives said. Many organizations are deploying these technologies into mission-critical systems without the necessary security measures in place, further exacerbating the cyber threat landscape, he added.

"We believe cybersecurity spending remains consistently high, and we see budgets for large strategic deals in this area increasing as more CIOs (chief information officers) build artificial intelligence into their strategy," Wedbush analysts said.

According to Wedbush, despite the unprecedented focus on AI, many companies are only now beginning to implement additional modules based on it. They expect spending on AI and cybersecurity to grow at an accelerating rate through 2026.

In addition, cybersecurity companies are actively developing AI to offer advanced solutions to defend against increasingly sophisticated attacks on cloud and network solutions, as well as on endpoint devices, applications, IoT (Internet of Things - smart speakers, fitness bracelets, etc.) and other areas, according to Wedbush.

They added that AI is emerging as a key enabler of the "fourth industrial revolution" and its mass adoption - especially of generative models - will open up massive opportunities for the entire technology sector.

Cybersecurity is among the key areas of the IVES AI 30 Index as one of the main beneficiaries of the AI revolution, notes Seeking Alpha. 

Analysts also expect the cybersecurity sector to see an increasing wave of mergers and acquisitions in the second half of the year - from both strategic players and financial investors - given the growing role of this technology in AI deployment.

In the report, Wedbush also named the top favorites in the cybersecurity sector for the second half of 2025. Among them are shares of Palo Alto Networks, CrowdStrike, Zscaler, CyberArk, Check Point and Varonis System.

- Palo Alto Networks shares were almost unchanged at the July 14 premarket. They have added almost 3% since the beginning of the year.

- CrowdStrike shares lost just over 2% on the premarket. Since the beginning of the year, they have risen almost 40%.

- Zscaler stock: minus 0.5% at premarket and plus ~61% this year.

- CyberArk shares were nearly unchanged at the July 14 premarket, and are up 12.5% YTD.

- Check Point stock was also unchanged on the premarket and added more than 15% in 2025.

- Varonis System shares fell nearly 1% in the premarket and are up 11.6% YTD.

This article was AI-translated and verified by a human editor