AI Is Dynamic, But Cybersecurity Is Durable

By: June 6, 2024

There’s no doubt that artificial intelligence (AI) has taken the marketplace by storm, but it’s been around since the 1950s.

We’re only now able with the computing power that we now have to build out a functional form of it for a variety of purposes using large language models. It would be easy to argue that if it wasn’t for the internet, AI would still be growing at its historically slow pace.

It’s still working out the bugs, even the biggest companies, like Alphabet (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT), have stumbled out of the gate with AI launches, although both have been working on AI for decades.

AI is very promising and is certainly going to be transformative. It’s a core MegaTrend and why I’ve launched my newest product, AI MegaTrends, to take advantage. It’s like navigating a river with Class 5 rapids right now – it’s for seasoned pros. Unless you have a guide, it could get ugly quickly.

Cybersecurity, however, is like having locks on your doors. They come with the house. They’re built into the design, and if need be, you buy up, but no house gets sold without minimal security.

Source: PR Newswire

The two most compelling markets to focus on here are the enterprise market and the federal government market for two different reasons.

The enterprise market is where the big money is. Businesses want to protect their data, and companies, like Amazon (NASDAQ: AMZN) and MSFT, the cloud computing giants, certainly don’t want their data compromised in any way, shape, or form. That’s a significant threat to their entire business model.

Here’s a good picture of how this spending and prioritizing looks by business sector.

Source: VentureBeat

And all those budgets are going up.

The challenge is, there are a lot of players in this sector – upstarts and veterans, small scrappy firms, and massive market leaders.

Some of the best-in-class pure plays right now are Palo Alto Networks (NASDAQ: PANW), Fortinet (NASDAQ: FTNT), CrowdStrike (NASDAQ: CRWD), and Cloudflare (NYSE: NET).

Source: IoT Analytics

This is the market everyone is fighting for a piece of, and that means there’s a lot of dynamic competition and innovation, and companies may choose to pivot from one vendor to another depending upon their needs.

On the other hand, the federal government is a big and growing market, but there are fewer competitors because while each department can pick its vendors for its numerous agencies, the system has to function as a whole. To even compete, companies have to pass through rigorous hoops.

Once in, you have less competition and are assured long-term contracts from a very stable partner that can pay its bills.

This is usually where companies like MSFT, PANW, FTNT, and Cisco (NASDAQ: CSCO) thrive.

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