Wedbush Securities analyst Daniel Ives has placed his bets on cybersecurity as the “biggest subsector” in the technology sector in 2025.
What Happened: According to Ives, as the world moves toward using cloud services for storing data, strong cybersecurity services becomes imperative for the protection of data.
He highlights that Crowdstrike Holdings Inc. (NASDAQ:CRWD), Zscaler Inc. (NASDAQ:ZS), Palo Alto Networks Inc. (NASDAQ:PANW), and Check Point Software Technologies Ltd. (NASDAQ:CHKP) could be the biggest beneficiaries of this trend during the upcoming earnings season.
“When you look at Crowdstrike, Zscaler, Palo Alto, Check Point, as more moves to the cloud, cybersecurity is going to move hand-in-hand. This is going to be one area that outperforms significantly during earnings season,” Ives told CNBC on Monday.
When highlighted that the cybersecurity ETFs have performed poorly in the near term, Ives quipped that they are going to be one of the best performers of 2025.
| Cybersecurity ETFs | One Month | Year-To-Date | One Year |
| First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) | -0.86% | 13.85% | 24.77% |
| Global X Cybersecurity ETF (NASDAQ:BUG) | -4.08% | 8.25% | 15.32% |
| Amplify Cybersecurity ETF (NYSE:HACK) | -0.92% | 11.28% | 25.62% |
“I think it’s because of rotation,” Ives said, highlighting the near-term underperformance. “I think the market’s got it wrong, when you actually look at the technology subsector, cybersecurity could be the biggest subsector of the year for tech,” he added.
Simultaneously, he reiterated his bullish views on Palantir Technologies Inc. (NASDAQ:PLTR), saying that it was on the “golden path to become an AI stalwart” over the next 12 months.
Meanwhile, he also expressed his optimism in International Business Machine Corp. (NYSE:IBM), and praised its CEO, Arvind Krishna. “When it comes to AI, I think what Arvind’s doing there is that there’s a renaissance going on in Arkmonk, that’s why we are very bullish on IBM,” he said.
When asked what the investors should look out for in IBM’s earnings, he said, “I think it’s cloud computing and it’s AI-driven revenue. Network services, you could say, is under pressure, but the stack, that’s what IBM is selling into a massive installed base,” added that this was going to get “rerated” as the investors “underestimate” it.
Why It Matters: Apart from the winners in this season, when Ives was asked about the potential earnings misses from the technology sectors during the earnings season, he pointed at Cisco Systems Inc. (NASDAQ:CSCO) and Dell Technologies Inc. (NYSE:DELL).
“If there is going to be weakness, that’s going to be from networking players like Cisco and legacy players like Dell.”
Major tech companies like Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) and Netflix Inc. (NASDAQ:NFLX) are scheduled to report on Thursday, July 17, and ASML Holding NV (NASDAQ:ASML) on Wednesday, July 16.
Other significant tech earnings, such as Microsoft Corp. (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), are expected in the coming weeks.
Price Action: At the time of writing this article, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were lower on Monday. The SPY was down 0.16% at $622.62, while the QQQ declined 0.16% to $553.33, according to Benzinga Pro data.
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