06 Dec 2023 1 min read

Cyber security growth, AI and valuations: a story in three charts

By Elisa Piscopiello

Three charts tell the story of growth opportunities in the cyber security market.

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Today, almost every aspect of our working and personal lives is digitalised. Precious family photos are stored in the cloud, hybrid workers collaborate on projects over virtual private networks, and even essential public services such as water and electricity rely on digital infrastructure.

Near-ubiquitous digitalisation has led to efficiency gains, but it’s also led to a huge increase in cybercrime, and an equally huge increase in the importance of cyber security.

Below are three charts on the trajectory of cybercrime and cyber security investment, the growing role of AI in cyber security solutions, and valuations in the sector.

1. Investment into cyber security is nowhere near the cost of cybercrime

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There is a significant mismatch between the cost of cyberattacks and investment in cyber security solutions. Some cyber security segments remain largely underpenetrated following growing demand for cloud security, Internet of Things and operational technology, web security and application security.

2. Rapid growth is forecast for AI cyber security solutions

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Fast-paced innovation in artificial intelligence (AI) has boosted the cyber security theme in two ways this year. On one hand, cyber security solutions will need to catch up with AI-powered attacks as they become more numerous and sophisticated. On the other hand, cyber security companies are adopting AI automation to help identify and fight attacks more efficiently.

3. Valuations in the sector are comparatively low

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Cyber security stock valuation metrics such as positive PEs and EV/sales are currently positioned towards the bottom end of their range over the past three years. They are also lower than AI peers and lower than or similar to other companies in the Nasdaq index.

Elisa Piscopiello

ETF Analyst

Elisa joined LGIM as ETF Analyst in June 2021. She contributes towards the development and analysis of investment strategies, whilst also supporting ETF distribution and marketing efforts. Prior to that, Elisa worked as Multi Asset Investment Support Executive at Liontrust, and as Investment Dealing Assistant at Architas. In 2016 she graduated from the University of Kent with a First Class degree in Financial Economics with Econometrics. She holds the Diploma in Investment Management (ESG) and is a CFA charterholder.

Elisa Piscopiello