Cybersecurity stocks are proving to be a key weapon against the expanding threat matrix brought about by artificial intelligence (AI). But that may pale in comparison to the upcoming threat from quantum computing.
Quantum computing could be "humanity's biggest breakthrough since the discovery of fire," say analysts at Bank of America.
Nvidia CEO Jensen Huang said the industry is now at an inflection point, adding that the world is "within reach" of being able to use quantum computers.
And while quantum computing holds the promise of solving critical problems that conventional computers cannot, there are plenty of dangers to be aware of.
In fact, as exciting as quantum computing may sound, it could also have a severe, negative impact on just about every part of everyday lives including banking systems, email communications, cryptocurrencies, communications, AI systems, and national defense.
Look at cryptocurrencies, for example.
Quantum computers would be able to solve the mathematical problems solved during Bitcoin mining much faster than classical computers. If that were to happen, it could alter the distribution of mining power and potentially impact the decentralized nature of certain cryptocurrencies.
Three, quantum computers could potentially break codes that keep cryptocurrencies safe, and even decrypt private keys from public keys. All of which allows bad actors to control cryptocurrencies.
Unfortunately, we can't just wait and see what happens. That’s why this is such a unique opportunity for cybersecurity stocks such as Palo Alto Networks (NASDAQ: PANW), CrowdStrike (NASDAQ: CRWD), Okta (NASDAQ: OKTA), and Zscaler (NASDAQ: ZS).
The total addressable market for cybersecurity is large enough to accommodate many of these stocks. However, ultimately, there will be consolidation in the market. That’s why it can be a good idea to diversify your exposure to cybersecurity stocks via cybersecurity ETFs, such as:
Global X Cybersecurity ETF (BUG)
The Global X Cybersecurity ETF (BUG) is down 1.22% in 2025 as of this writing. However, that’s a little deceptive. Cybersecurity stocks have been falling in sympathy with the broader technology sector.
But the reason for the sell-off has more to do with valuation than with concerns about useful applications. CrowdStrike CEO George Kurtz made it clear that the threat posed by agentic AI is already expanding the threat environment these companies have to deal with.
That’s why it helps to zoom out. In the last three years, the BUG ETF has delivered a total return of over 38% and in the last five years, the total return is over 43%.
"The Global X Cybersecurity ETF (BUG) seeks to invest in companies that stand to potentially benefit from the increased adoption of cybersecurity technology, such as those whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices," says Global X.
As of this writing, the company has just under $1 billion ($999.28 million) of assets under management (AUM) and has a net expense ratio of 0.51%.
iShares Cybersecurity and Tech ETF (IHAK)
Similar to the BUG ETF, the iShares Cybersecurity and Tech ETF (IHAK) is up just 0.77% year-to-date as of this writing. That may be due to the fund’s narrower focus on cybersecurity hardware and software.
According to iShares, "The iShares Cybersecurity and Tech ETF seeks to track the investment results of an index composed of developed and emerging market companies involved in cyber security and technology, including cyber security hardware, software, products, and services."
In the last three-year and five-year time periods, the performance of the IHAK ETF has been almost lock step with the BUG ETF with total returns of 39% and 45% respectively. The fund has over $876 million in assets under management and an expense ratio of 0.47%.
The Last Word on Cybersecurity Stocks
Quantum computing promises historic breakthroughs, but it also introduces powerful new risks that traditional cybersecurity cannot handle. With cyber threats set to accelerate, cybersecurity ETFs like BUG and IHAK offer diversified, long-term exposure to industry leaders positioned to benefit as enterprises, governments, and consumers rush to upgrade their defenses.
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