Cybersecurity Sector Poised for AI-Driven Rebound After Recent Sell-Off

February 18, 2026 - 00:30

A significant sell-off in software stocks has hammered the cybersecurity sector, with many leading names caught in what analysts are calling an "AI scare trade." However, this downturn may be creating a prime buying opportunity for investors, according to Wedbush's prominent analyst Dan Ives.

Ives argues that the market is currently overlooking a crucial long-term trend. While artificial intelligence has initially sparked fears of disruption, it is set to become a "major tailwind" for established cybersecurity firms. The explosion of AI-generated code and increasingly sophisticated AI-powered cyber threats will necessitate robust, advanced defense systems. This evolving landscape will drive enterprises to significantly increase their security budgets, favoring proven platform companies with comprehensive solutions.

The analyst notes that the recent underperformance of cybersecurity stocks is a typical overreaction during a technological shift. He believes the sector is now oversold and positioned for a strong rebound. As corporations globally accelerate their digital transformation and cloud migration, the need to protect data and infrastructure becomes non-negotiable. The integration of AI tools into security platforms for threat detection, response automation, and behavioral analysis is expected to be a core growth driver, making select cybersecurity firms essential holdings in the coming AI era.