The need for robust cybersecurity has grown more acute as the world has become more digitally interconnected. We can think of very few important secular themes that aren’t vulnerable to cyber threats. Artificial intelligence, cloud computing, online shopping, physical infrastructure modernization, and several other themes will depend on cybersecurity for the foreseeable future as a necessary cost of doing business, in our opinion.

Given the focus on growth for most cybersecurity stocks, relatively high valuations have often been expected and generally brushed aside. After all, above average growth usually comes at a cost. But one of the fascinating developments that has occurred in 2023 is that relative valuations for cybersecurity stocks have become meaningfully more attractive, in our opinion, even as stock prices rallied.

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