In This Article:
Listen and subscribe to Trader Talk on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
Looming uncertainty over tariffs and a potential economic downturn has made it hard for investors to make long-term plans. But according to Wall Street veteran Kenny Polcari, there may be one sector that has a chance to weather this storm.
"Everyone is obsessing over AI," Polcari said in a new episode of the Trader Talk podcast (see video above or listen below). "Guess what? No one's talking about cybersecurity's critical role in the AI boom."
Polcari argued that "unlike most sectors, cybersecurity is completely tariff-proof."
He added that cybersecurity companies like CrowdStrike (CRWD), Palo Alto Networks (PANW), Fortinet (FTNT), Zscaler (ZS), and CyberArk (CYBR) may be well-suited to survive in this uncertain market. Though the stock market has seen a relative decline year to date, many of these companies have bounced back better than most.
"AI growth isn't possible without bulletproof security," Polcari said. "Every new AI application and chatbot — autonomous vehicles, generative models, cloud computing — depends on massive amounts of sensitive data. And the more data we generate, the bigger the cyber risk becomes."
"Tariffs and trade wars can't slow that down," he added. "If anything, global uncertainty makes cybersecurity even more essential."
Tariffs and escalating trade tensions have primarily put pressure on companies that import physical goods and energy, leaving software and data largely unaffected. Though investors will likely see general swings in cybersecurity stocks in line with broader market trends, the cybersecurity industry isn't as reliant on the goods these tariffs target.
Read more: What Trump's tariffs mean for the economy and your wallet
"Instead, their growth accelerates when uncertainty increases, exactly when other stocks become vulnerable," Polcari said. Add to this that many of the key players in the cybersecurity race right now are based in the US, and even potential counter-tariffs aren't likely to cause significant decreases in this sector's returns.
"Look around," he continued. "Banks, healthcare providers, data centers, cloud platforms — they're all leaning deeper into AI. And with that AI expansion comes increased vulnerability. The more data and digital infrastructure grow, the bigger the cybersecurity spending becomes."
Though no sector may be safe should the US descend into a full-blown recession, Polcari insisted that cybersecurity is "the sector quietly benefiting from all the noise."