Cybersecurity hardware, software, and services providers are expected to see rapid sales growth and remain undervalued through 2028 [1, 2, 3].

This trend signals a shift in the U.S. equity markets, specifically within the S&P 500 technology sector [3]. As organizations modernize their digital defenses, the gap between current stock valuations and projected growth may present opportunities for investors looking for a foothold in the security industry.

Market analysts said that the surge in demand is primarily fueled by the accelerating adoption of artificial intelligence [1, 2]. AI has fundamentally altered the threat landscape, forcing companies to invest in more sophisticated, automated defense mechanisms to counter AI-driven attacks. This shift is creating a sustainable growth trajectory for firms that can integrate AI into their security offerings.

Beyond current AI trends, a second catalyst is emerging in the form of post-quantum computing spending [1, 4]. The potential for quantum computers to break traditional encryption methods is driving a new wave of investment in quantum-resistant cryptography. Analysts said this anticipation is pushing firms to upgrade their infrastructure well before quantum threats become a widespread reality.

These factors have left several firms in the sector appearing cheap relative to their growth potential [1, 2]. While the broader tech sector has seen significant volatility, the essential nature of cybersecurity services provides a level of resilience. The demand for these services is often viewed as non-discretionary, as a single breach can result in catastrophic financial and reputational damage for a corporation.

Industry projections suggest that this cycle of rapid growth will persist for the next few years [1, 2, 3]. The combination of AI integration and the transition to post-quantum standards creates a dual-track growth engine for the sector through 2028 [1, 4].

“Cybersecurity stocks are expected to experience rapid sales growth and are considered undervalued through 2028.”

The projected growth in cybersecurity reflects a structural shift in corporate spending where security is no longer an IT overhead but a core business necessity. The move toward post-quantum spending suggests that the industry is pivoting toward long-term systemic risks, while AI adoption addresses immediate, evolving threats. For the market, this implies that the cybersecurity sub-sector may decouple from general tech volatility if growth remains tied to these critical infrastructure upgrades.