Market Factors: Revenue growth for this sector as close to guaranteed as there can be

NEWSLETTER Market Factors: Revenue growth for this sector as close to guaranteed as there can be SCOTT BARLOW MARKET STRATEGIST PUBLISHED 54 MINUTES AGO COMMENTS SHARE SAVE FOR LATER Listen to this article Learn more about audio Log in or create a free account to listen to this article. This Market Factors begins with a sector almost certain to grow revenues by protecting corporate data from AI-driven hacking. The next section covers two stocks likely to benefit from electricity shortages and the diversion points to the fascinating winners from the annual Gizmodo science fair. The Quick Hits section includes news on Enbridge, AI’s (lower-than-you’d-think) contribution to U.S. GDP growth, and the declining quality of hyperscaler balance sheets. Open this photo in gallery: KACPER PEMPEL/REUTERS TECH AI requires major security upgrades There are no guarantees in markets but revenue growth for the cybersecurity sector in the age of AI comes as close as it ever gets. Recent reports of AI agents jailbreaking their way over safeguards and hacking into foreign websites is only the beginning of a new AI-driven security threat, one that will have big budgets handed over to chief technology officers to protect corporate networks. Morgan Stanley analyst Meta Marshall (an enviable handle it should be noted) published a report over the weekend highlighting the huge TAM (total addressable market) ahead for cybersecurity companies Palo Alto Networks (PANW-Q +1.67% increase ), Crowdstrike Holdings (CRWD-Q +4.00% increase ), and Okta (OKTA-Q +3.73% increase ). Independent research firm International Data Corporation (IDC) estimates a 15 per cent compound annual growth rate for the sector in the next two years. Ms. Marshall believes the growth rate could climb to 23 per cent afterwards as threats from AI require updates to more sophisticated security. Morgan Stanley estimates that 80-90 per cent of cyberattacks are now attempted by AI and the cost to do so is approaching zero. The analyst writes, “We’ve become increasingly concerned about AI security risk, with a litany of breaches where agents exhibited behaviors like collaboration, cheating, blackmail, acting autonomously, and independent goal setting.” At the same time, many smaller and mid-sized companies do not yet have updated network security. Ms. Marshall recommends holding a basket of her three favourite stocks, those listed above, but rates Palo Alto as her top pick. Many of the stocks have doubled…