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AI WON'T EAT CYBERSECURITY, SAYS BERENBERG

The rout in European software may have gone too far at least for cybersecurity names, with Berenberg saying fears around AI disruption underestimate the sector's underlying strength.

Software has lagged sharply as investor flows rotated towards near-term AI monetisation plays such as chips and infrastructure, compressing valuations elsewhere on concerns that AI could erode long-term growth and margins.

But the German bank says the "AI eats software" narrative is being applied too broadly and has unfairly dragged down cybersecurity.

"We believe concerns that AI disrupts software are largely unfounded for cybersecurity companies," Berenberg analyst Rahul Chopra says.

Rather than disintermediating cybersecurity vendors, Berenberg argues that AI is likely to expand the market by increasing "attack surfaces", empowering cybercriminals and forcing corporates to invest more heavily in defence.

With surveys pointing to higher cybersecurity budgets in 2026 and consensus forecasts being upgraded, the bank says the recent de-rating has improved the sector's investment profile.

Platform players Zscaler ZS.O, Okta OKTA.O and CrowdStrike CRWD.O remain Berenberg's preferred exposures.

(Danilo Masoni)

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