Cyberattacks are exploding and investors are cashing in
Goldman Sachs
The amount of sensitive data stored online has increased exponentially in recent years, and so has the number of attempts to steal that information.While this is a huge problem to both the government and private companies, for some it is an opportunity.
"In May 2015, the Goldman Sachs Chief Information Security Officers (CISOs) survey found that almost 60% of respondents expected to boost security spending by at least 5%, with 20% budgeting increases greater than 15%," Goldman Sachs' David Kostin said in a note to clients.
The value of good cybersecurity, and the bottom lines of companies offering it, has exploded.
Goldman's ISE Cyber Security Index, a collection of 30 publicly traded cybersecurity companies, has grown 19% faster than the S&P 500 year-to-date, following a trend established the last few years. Companies in the index include FireEye, CyberArk Software, Infoblox, Palo Alto Networks, Fortinet, and AVG Technologies.
"Since 2011, the total return of the index is 123pp higher than the S&P 500 (207% vs. 84%)," Kostin said. As you can see in the chart, the amount the stocks are outperforming the S&P coincides with the number of files exposed through cyberattacks.
And sales for cybersecurity companies are expected to continue their meteoric rise.
"Consensus forecasts the median cybersecurity firm in the HXR index will grow sales by 14% in 2015 and 11% in 2016, substantially above the Info Tech sector (4% and 6%) and the S&P 500 (2% and 5%)," Kostin said.
"Last year 3,014 data breach incidents occurred worldwide exposing 1.1 billion records, with 97% related to either hacking (83%) or fraud (14%)," Kostin said. "Both incidents and exposed records jumped by 25% during the last year."
Cyberattacks are getting more and more attention, which means cyber-guards are going to continue to get more and more money.