The BetaShares Global Cybersecurity ETF (ASX: HACK) has been swept up in the broader AI market sell-off.
It has fallen more than 14% year to date.
However a new report from Betashares indicates the underlying forces driving cybersecurity demand may be strengthening.
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Fund overview
This ASX ETF aims to track the performance of an index (before fees and expenses) that provides exposure to the leading companies in the global cybersecurity sector.
It is currently made up of 32 underlying holdings.
These include a range of areas of cybersecurity, including:
- Systems Software (40.7% allocation)
- Communications Equipment (15.0%)
- Internet Services & Infrastructure (12.5%)
- Research & Consulting Services (9.0%)
- IT Consulting & Other Services (7.8%)
- Semiconductors (7.3%)
- Aerospace & Defense (5.3%)
- Application Software (2.4%)
By geography, it has a dominant exposure to companies based in the United States (roughly 78%).
It may also be of specific interest to Australian investors because global cybersecurity is a sector that is heavily under-represented on the ASX.
Why now could be an ideal time to gain exposure
According to a new report from Betashares, cybersecurity stocks have experienced a sharp sell-off in February 2026, as investors reassessed the impact of new agentic AI tools on the software sector.
While markets focused on disruption, the underlying forces driving cybersecurity demand may be strengthening.
Hugh Lam, Investment Strategist at Betashares said AI is not only changing the technology landscape, it is reshaping the threat environment.
Mr Lam said techniques such as prompt injection attacks and AI agent impersonation are expanding the toolkit available to bad actors.
In practice, this means the frequency and sophistication of cyber threats is likely to increase rather than diminish.
Cyber defence spending on the rise
The report also said that geopolitical tensions are reinforcing the importance of robust cyber defences.
Cyber operations have become a strategic tool for nation states, targeting everything from communications systems to critical infrastructure. For businesses and governments alike, cybersecurity is increasingly viewed as essential.
Betashares also pointed out that when it comes to spending, security software is the part of IT budgets governments are least willing to cut.
The scale and resilience of this spending are also reflected in rising M&A and deal activity across the sector. Larger cybersecurity platforms are consolidating 'best-of-breed' security tools into one integrated ecosystem, while combining AI capabilities with vast proprietary datasets and broad product ecosystems.
Furthermore, global cybersecurity spending is forecast to reach US$308 billion in 2026, according to the International Data Corporation.
Against that backdrop, the companies best positioned in cybersecurity may be those with the scale, technology and data to stay ahead of an evolving threat landscape.
