Deep Dive Interview: why cybersecurity and defence may be complementary themes

Published date: 20th Feb 2026 | Author: Axel Belorde, Head of Business Development, EMEA & Asia at VettaFi

Has the recent sell-off in Software as a Service (SaaS) and cybersecurity stocks changed the sector’s outlook?

The recent sell-off in SaaS and cybersecurity stocks has prompted questions about the outlook for the sector. Yet operational performance across many leading cybersecurity companies, such as CrowdStrike, remains strong.[1]

Importantly, the rise of large language models (LLMs) and AI coding agents does not replace the need for enterprise-grade cybersecurity. Tools that identify vulnerabilities in code during development play a useful role, but they operate at a very different stage of the security lifecycle compared with systems that monitor and protect live networks.

As CrowdStrike CEO George Kurtz recently explained, development-stage tools help detect bugs in source code before deployment, while platforms such as CrowdStrike Falcon detect and respond to threats across live endpoints and operational systems. These capabilities are complementary rather than interchangeable.

« If anything, the rapid adoption of AI may increase the need for cybersecurity. »

As organisations deploy more software, automation and connected systems, the number of potential entry points for attackers expands. This makes robust, enterprise-grade cybersecurity infrastructure more critical than ever.

Why, in your view, is cybersecurity important to include in defence exposures?

When we think about constructing a defence index, we think about being focused on giving exposure to the entire defence value chain – from industrials to operational AI leaders – and we have added, from the beginning, cybersecurity companies with defence contracts to make sure the data flow between these first two components is secured.

Examples include Cisco, CrowdStrike Holdings, and Palo Alto Networks. But there are many other companies providing a number of cybersecurity solutions for ministries of defence infrastructure, equipment on the ground, and virtually any piece of the kit of the modern soldier (including, of course, the too-often-forgotten suppliers!).

These are the sort of names considered for inclusion in defence indices. However, equipment manufacturers and defence technology companies also package in cybersecurity solutions to win contracts as they need to maintain the highest information security compliance standards to be eligible for procurement in the first place. Well organised data, semantically structured with encryption at rest and in transit, is an excellent premise to deploy a mature defence innovation strategy. Countless silos of point solutions are counterproductive from an operational but also a cybersecurity strategy perspective.

Remember that every player in the value chain counts, including physically securing critical facilities. A chain is only as strong as its weakest link. Every staff member, every soldier, every task-specific AI agent makes a difference; and it does greatly help when they have all been permissioned with the right data accesses in the first place.

Winning in modern warfare is increasingly about data mastery. In that context, and with military alliances’ budget carving out a specific allocation for new technologies like cyber, the outlook for cybersecurity names appears solid.

« From the physical kit of the modern soldier to autonomous AI agents, every entry point represents a cybersecurity opportunity for the firms in this portfolio. «

Why cyber resilience is becoming an ever-bigger priority

Individuals, enterprises and governments are leveraging an exponential amount of data. But you can’t have a data-driven world without ensuring the security of that data. We now depend on data and software for everyday tasks: payments, logistics, healthcare, transport. Security covers the data itself and the permissions and identities around it, for both people and machines, across fleets of devices, vehicles, drones and industrial systems.

In the government sector for instance, you can have the best sensors, data integration capabilities and operational AI. But if the bi-directional data flow between data sources and decision-enhancing software gets compromised, you might be better off having no data than compromised data. The same applies to enterprise security and, more generally, cybersecurity on personal and smart home devices we are using every day. We have witnessed recently a trend towards more automation globally – both physical (robotics including humanoids and drones) and digital (AI), and this makes the security of data flows and applications even more crucial. You certainly would not want your home robot to be hacked by unfriendly actors, even if it’s for a short period of time. Generative AI can even help criminals tailor spear phishing, clone voices and images and test systems at scale, which raises the bar for defences.

Has there been a rise in the number of malicious actions by either criminal gangs or hostile powers?

There is a close connection between data and sovereignty and the quest for long lasting competitive advantage in economic and geopolitical terms. As a result, it’s unsurprising to see the rise in geopolitical tensions coincide with the rise in cyber-attacks against civilian or government infrastructure. Securing one’s country is not just about securing critical energy and communications infrastructure, it also starts at the micro level. We know that sophisticated attacks can be engineered starting from a weak spot at any level in the data value chain. Criminal actors, whether they be state sponsored or not, are also relying on cyber-attacks to hack crypto wallets, spread ransomware or access high-value confidential data.

How do you think developments in AI and quantum computing affect cybersecurity, both in terms of the threats, but also solutions?

As AI continues to penetrate more sectors and products there is a growing need for innovative cybersecurity solutions. Some attacks are powered by AI and malicious actors are able to leverage AI to engineer complex attacks which are not uniform but instead adapt themselves to targets’ reactions and counter measures. As a result, we are seeing a lot of potential in cybersecurity leveraging artificial intelligence to build better defences. Security is needed at every step of the value chain and along the data flow. The more point systems and tools are used in an IT infrastructure or device, the more vulnerable it can become unless cybersecurity is built-in by design. Further, without energy and data centres, AI is also powerless and data-poor; hence the need for cyber as well as physical security for critical energy infrastructure and data centres. Physical security is often neglected, but many attacks continue to begin with a physical component.

Regarding quantum where few pure play listed companies exist as of today, we are monitoring it very closely as it has the potential to challenge traditional encryption. That being said, many leading players are now working on deploying quantum compute not just on combinational problems but more classic large parameter solving problems where GPUs have typically been the default solution, at least since 2017 or so. Hence, while we have no definite answer on the challenges, as quantum computing is still a technology that needs to reach higher maturity, and commercial availability, we have read in detail guides of leading cybersecurity providers on how to secure enterprise infrastructure in a quantum world, and this can start by simply frequently rotating encryption keys. When adding the « time factor » to the equation, the challenge of breaking encryption becomes very different.

Do you think the winners will be companies that can offer individual solutions or an entire platform?

An entire ecosystem of companies benefits from the growing need for more innovative cybersecurity solutions. First, security and compliance standards need to be respected at the software, data platform, and facility level. This is particularly critical for all companies seeking government contracts. Securing a large IT architecture is not easy, especially if decades of point solutions purchasing render the castle penetrable by more ports. Leading end-to-end data platforms dedicate entire software engineering teams to ensure encryption of data at rest and in transit. Failure to do so can have drastic revenue impact once trust is broken. Penetration testing teams including digital and physical components will continue to see strong demand.

Second, we see cybersecurity use cases as data problems per se. Better cyber solutions, better observability and AI-powered cyber defence require the roll-out of cybersecurity specialised ontologies. Without this semantic and expert knowledge, cybersecurity AI agents won’t be much of a help.

Third, we have seen interest in securing data at other steps of the data flow using novel techniques like confidential computing with use cases across several industry sectors. It might be a solution to ensure collaboration between different industry players on high value use cases including sharing more insights on cyber threats and sophisticated attack patterns in near real time.

Finally, we have to stress the importance and relevance of physical security. Zero trust architectures need to be complemented by good physical access controls, trusted providers of routers/data centre equipment. In other sectors, electromagnetic spectrum dominance is key to preserving competitive advantage. For example, needless to explain what would happen if your counter-drone defence tooling preserving your most precious energy facilities and asymmetric advantage on the field gets hacked just in time to allow for a drone swarm to strike. Malware can stay dormant for years before being activated at a strategically important time and constant monitoring is important.

🔑 Key Takeaways

The SaaS and cybersecurity sell-off hasn’t changed fundamentals—demand remains strong.
AI is expanding the attack surface, increasing the need for cybersecurity.
Cybersecurity is now a core pillar of modern defence, not an add-on.
Rising geopolitical tensions are driving more cyber-attacks on critical infrastructure.
End-to-end platforms are gaining importance as fragmented systems create vulnerabilities.

This material does not constitute a marketing document. It is not an invitation to invest but to be read for educational purposes only.

[1] Source: CrowdStrike; Palo Alto; Zscaler; VettaFi research, Q1 2026.

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Deep Dive Interview: why cybersecurity and defence may be complementary themes

Has the recent sell-off in Software as a Service (SaaS) and cybersecurity stocks changed the sector’s outlook?

﻿ « If anything, the rapid adoption of AI may increase the need for cybersecurity. »

Why, in your view, is cybersecurity important to include in defence exposures?

﻿ « From the physical kit of the modern soldier to autonomous AI agents, every entry point represents a cybersecurity opportunity for the firms in this portfolio. «

Why cyber resilience is becoming an ever-bigger priority

Has there been a rise in the number of malicious actions by either criminal gangs or hostile powers?

How do you think developments in AI and quantum computing affect cybersecurity, both in terms of the threats, but also solutions?

Do you think the winners will be companies that can offer individual solutions or an entire platform?

🔑 Key Takeaways

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« If anything, the rapid adoption of AI may increase the need for cybersecurity. »

« From the physical kit of the modern soldier to autonomous AI agents, every entry point represents a cybersecurity opportunity for the firms in this portfolio. «