Cybersecurity ETF Jumps 24% as Fortinet, Palo Alto Rally

The WisdomTree Cybersecurity Fund (WCBR) rose about 24% over the past month, helped by a 32% gain in Fortinet last week and renewed investor interest in security stocks tied to artificial intelligence partnerships.

WCBR tracks the WisdomTree Team8 Cybersecurity Index and holds large-cap security vendors alongside smaller specialist firms. Fortinet, one of the ETF’s top 10 holdings, was among the largest contributors to the ETF’s one-month gain.

Several top WCBR holdings have reported or been linked to AI partnerships. Morningstar analyst Dave Sekera noted Palo Alto Networks’ invitation to Anthropic’s Project Glasswing as an example of recognition from AI developers and added that the market has begun to assign higher valuations to some security vendors. “It’s finally nice to see these cybersecurity stocks we have been talking about for so long get the recognition in the marketplace for the type of valuations we think that these companies are worth,” he said.

Analysts point to the sector’s steep decline earlier this year, often called the “SaaSpocalypse,” as a factor that left some names deeply discounted. Sekera identified Zscaler as a five-star rated stock trading at roughly a 50% discount and described it as more appropriate for higher-risk investors. He noted Okta trades about 16% below Morningstar’s fair value assessment and carries a four-star rating. Zscaler and Okta are WCBR’s fifth- and 12th-largest holdings and together make up more than 9% of the ETF’s portfolio.

Market participants cite examples where AI firms have sought security partners to help manage and secure AI deployments, a development that has encouraged some investors to reenter the sector. The recovery among cybersecurity stocks has been uneven, with some companies posting sharp gains while others remain below analyst valuations.

WCBR’s composition means the ETF’s returns will reflect both large, headline-grabbing rallies and smaller recoveries among underfollowed names. Performance going forward will depend on individual companies’ results and any further AI-related partnerships or contracts.