AI safety concerns support higher cybersecurity valuations

AI safety concerns present a meaningful and lasting catalyst. Cybersecurity sentiment continues to improve as investors focus on the security implications of agentic AI. Over the past month, cyber ETFs HACK/CIBR rose 7.3%/6.4%, outperforming the IGV software ETF and S&P 500 at 2.8%/-0.9%, respectively. The AI conversation has flipped from disruption risk to recognition that AI creates new attack surfaces, new identities, and new governance needs which demand additional security investment. We believe the market is increasingly pricing in a step-function increase in cyber risk, supporting both higher security spending and a more constructive valuation framework across the sector. Recent developments reinforce that AI is expanding the scale and sophistication of cyber threats: Anthropic's CEO voiced concern that in 6-12 months an agent swarm could be capable of taking over the internet and causing billions of dollars in damage, while OpenAI disclosed agents inserting new instructions, co