Is AI The Trojan Horse? AI-Driven Cyber Risk Could Benefit These ETFs – Global X Cybersecurity ETF (NASDAQ:BUG), First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR)

Artificial intelligence could be considered a “Trojan horse” because, while it’s widely promoted as a productivity-enhancing tool for businesses, it also sneaks in hidden dangers—namely, a powerful new toolkit for hackers.

According to Jay Chaudhry, CEO of Zscaler Inc ZS, AI could spark new cyberattacks. “It’s becoming much easier to attack a company,” Chaudhry told Yahoo Finance. “To fight AI, you must fight it with AI,” he added.

That warning highlights why cybersecurity stocks, and the ETFs holding them, could be on the verge of a breakout.

HACK ETF is in focus as AI-related risks evolve. Check live prices.

For investors, cybersecurity is no longer a “pick-and-choose” industry. With AI generating increasingly sophisticated phishing attacks, deepfake scams, and automated assaults, cybersecurity has moved from being a niche investment to a portfolio cornerstone.

Several ETFs are already set up to play this trend:

• A Straightforward Play. The Amplify Cybersecurity ETF HACK, with around $2.3 billion in assets, invests in a basket of security software, hardware, and services companies, such as Zscaler, Crowdstrike Holdings Inc CRWD, and Palo Alto Networks Inc PANW. So far this year, the fund has returned more than 15%, at par with the broader Nasdaq 100 index, as investors placed bets on increasing enterprise spending to secure AI-exposed systems.

• Reducing Single Stock-Volatility. Another major player is the First Trust Nasdaq Cybersecurity ETF CIBR, with over $10 billion in assets under management. CIBR follows a more extensive index but also has the same heavyweights, CrowdStrike and Palo Alto, as two of its top holdings. The fund returned around 19% YTD. Its diversified holdings, extending across infrastructure and identity management names, provides a diversified means of enjoying the sector’s momentum.

• For A More Focused Bet. Global X Cybersecurity ETF BUG focuses on companies that get at least half their revenue from cybersecurity. That skew provides investors with “pure play” exposure but also with increased risk. BUG has risen 7% this year and is more volatile than its big-cap brethren.

It looks like the AI security boom is near. Zscaler’s recent buyout of Red Canary, a managed detection and response company, is an indication that the industry is preparing for next-generation threats. Cybersecurity spending is set to reach almost $240 billion in 2026, Gartner estimates, which is a 12.5% increase from 2024. ETFs provide an easy gateway to that growth.

The question is whether this will be the next sector trade. Suppose AI attacks materialize as quickly as experts say they potentially could. In that case, cybersecurity ETFs might not only be defensive holdings but also offensive winners within investors’ portfolios, profiting from the AI-induced surge in demand.

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