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Cybersecurity 2026: AI Hacks & the Quantum Shift, Crypto (WOLF EU)
Recorded: Feb. 26, 2026 Duration: 1:09:19Space Recording
Full Transcription
Thank you. Thank you. Good afternoon. Good morning. Good evening, wherever you're tuning in from. Welcome back
to the Wolf EU show with my lovely co-host Alex, Trader Alex. What's up? Good morning, quantum and cybersecurity.
Let's see here. IonQ had a little bit of a reaction from their fantastic earnings.
Let's see here. They beat their earnings by 450% and their revenue by 61.7%, which was quite a surprise.
And we're seeing a few quantum stocks here following along.
The wave is also pre-market by about 4% and inflection as well.
So interesting start to the day.
So I'm just inviting everyone up to the show. Where is everyone today? Are we still in bed? Is it the end of the week grind? I guess. I don't know about you,
but I'm still half asleep here in the UK. I'm joking. So good morning, everybody. Good afternoon. We're
basically covering the quantum space today. We talked a lot about the AI securities and
things like that in outer space, but we never got the chance to cover actual security. All
of our data, everything's moving to AI these days, Isn't it scary out there? So we'll be covering a bit of
cybersecurity names, how your data is sort of maybe being stored or where that's going to.
And some other interesting perspective lenses is cryptography and potentially what's quantum
doing in that space with crypto as well. So I brought on a few guests from the crypto world
as well. Shout out to the Wolf few guests from the crypto world as well.
Shout out to the Wolf crew here.
Good morning to you, Taj.
Good morning.
Good morning, Eva.
Yeah.
Hey, hey, hey.
How you doing?
As usual, always happy to pop in bright and early on my side.
I love it. You guys are absolutely true warriors for getting up so early in the U. 7am this time. And I brought my favorite guests along. Mads, as always, a pleasure to have you and Lighthouse and from value.
Yeah, thanks for having me. Excited to be here.
Absolutely. And of course, Joe, good morning to you as well. My quantum guys have to always have you And, of course, Jonathan, our lovely speaker here from Leverage Shares, as always.
Good morning to you.
Good morning.
How is everyone doing?
Good.
I think everyone's sort of almost ready to wrap up the week, it feels like.
Yeah.
So I just have to read a quick disclaimer.
Obviously, this space is provided for you for educational purposes and for you to do your own research. We try and bring on some of the best names and guests here to basically share the insights and the expertise.
consider any funds investments, objectives, risk charges and expenses before investing.
Funds prospectus and summary prospectus contain all this information about the income shares
ETPs from leverage shares.
And to obtain that prospectus and key information document, you can visit their website at IncomeShares.com.
And the funds prospectus and key information document should always be read carefully and
considered before investing. And that goes out to any fund you come across out there in the world, which we'll also
be covering in next week as well, potentially. So some exciting stuff. Lighthouse, I would love for
you to kick off the show, give us a little backdrop about what's going on in cybersecurity,
sort of the layers and things from space to tech. It's such a complex
sort of space. It's not as easy as people think it is. Yeah, no, I'm happy to kick it off. And
for everybody who doesn't know me, I'm Bob Sheehan. I'm the CIO and founder of Lighthouse Macro. So
I'm going to be coming at this from a macro perspective. So first of all, the big picture,
and this matters because too many people talk
about cybersecurity like it's a sector you've rotated
into when there's a headline grabbing breach or something,
but it's not, it's a structural thing.
The global cybersecurity market is projected
to hit roughly 248 billion in 2026.
It's growing at nearly a 14% CAGR through 2034.
And the number that puts everything into context, global cybercrime costs are running at about
10.5 trillion annually.
If cybercrime were a country, it would be the third largest economy in the world behind
the US and China.
So just let that sink in.
It's a massive space and it matters.
What makes this different from other tech verticals
is the spending floor. Cybersecurity is a lot more resilient to macro headwinds than most other IT
line items. Why is that? Because compliance requirements, insurance mandates, regulatory
floors, you can cut your SaaS budget, you can delay your cloud migration or something
like that, but you're not going to cut your spending after a breach. The CIO surveys from
Morgan Stanley are showing right now cyber budgets are growing 50% faster than overall software spend
and the total addressable market is growing because of AI. And McKinsey puts that at about $2 trillion.
So like I said, I said $250 billion right now, going up to $2 trillion with this new
AI market expanding the whole space.
About 15% of cyber spending now comes from outside the CISO's office.
So it's product teams, DevOps, business units.
They're all buying security tools independently to match their own needs. And VC's funding in cybersecurity hit $14 billion
in 2025 and is up about 50% year over year, 47%. So it's just a massive space. And I don't think
people truly appreciate how big it is because, I mean, global cybercrime being the third largest country is pretty insane stat to throw out there, but it really does put things into perspective on
how important this is and why I think a lot more people need to realize that it isn't just this
cyclical sector that you kind of want to rotate in and out of. It's something that is here to stay
and, if anything, only becoming more important. So on the offensive side, you have AI-powered attacks like polymorphic malware generated on the fly.
Autonomous network probing is done in minutes now, not days.
You have sophisticated phishing at scale.
So 87% of CISOs cite the AI vulnerability as their fastest-growing threat.
AI is just transforming this space at a rapid pace.
And I think we're only going to see that pick up.
So all those numbers I just threw out that already sounded insanely big,
I would even put those higher.
I honestly think the risk is to the upside in this space.
And AI is changing it on a daily basis.
And it's just a space that we need to start paying attention to over the long term.
So on the defense side, this is where the investable opportunity really lives.
Real time anomaly detection, which is the dark trace model where AI learns what normal
looks like for your specific network and flags deviations. AI native SOC platforms like CrowdStrike, their Charlotte AI,
which is essentially automating the security operations center,
autonomous response containment,
where the system can isolate a threat in milliseconds without waiting for a
human analyst.
So all these things are really rapidly changing through this AI,
both on the defense side and on the offensive side,
on the threat side.
So it's important to kind of just stay on top
of what these largest companies are doing
and how the space is adapting and changing.
64% of firms now formally assessing the security
of their AI tools, that's double from a year ago.
So you're seeing it happen in the
actual spending underneath. It's not just the big firms that are doing it. It's broad-based, right?
The net effect here is that the spend is pretty much non-negotiable. Every firm you know about
needs cyber spending. They are all investing in it, and they're all investing in the AI side as well as
just their traditional cyber spend. So you kind of have this double hit to that spending that is
kind of, like I said, a non-negotiable. Everybody has to have it and they continue to do so.
So the elephant in the room is going to be the quantum. This is where most analysts are still
kind of mispricing things. The line I keep coming
back to is that the practical threat isn't when quantum computers can break encryption. The
practical threat is harvest now, decrypt later. So let me explain what that means. Adversaries,
and like we're talking state-level actors, are already collecting encrypted data today. So
they're stockpiling it.
And because they know that once a cryptographically relevant
quantum computer arrives, they can crack all of that,
all the stuff they've been stockpiling retroactively.
So for any data that needs to remain confidential
for years or for decades, think things like health records,
government communications, financial infrastructure, IP, the window to
kind of act is closing, not when that day arrives. You need to act now because they are going to come
back retroactively, release all of that. So the NIST finalized the first quantum cryptography
standards in 2024. The UK's National Cybersecurity Center has published a three-phrase migration roadmap,
cryptographic discovery by 2028, high-priority systems migrated by 2031, full transition by
2035. US federal agencies have a hard deadline of 2035 with deprecated algorithms disallowed above 128-bit security. So here's the gap.
Only 5%, five, have quantum-safe encryption in place today. 56% of mid-sized enterprises
admit they're not prepared at all. Think about that. Literally more than half of enterprises
have no preparation for this and really need to get the ball rolling or they're going to be too late.
The PQC market is projected to reach about 18 billion by 2034.
That's a lot of infrastructure spend that just simply hasn't started yet.
So then there are firms who are doing it.
Google has been preparing since 2016.
So they have a decade head start that most of these firms do not.
And then here's where I want to bring in a crypto lens as well, because the event description specifically access to connect this.
And I wanted to kind of bring this side into play.
play um absolutely okay cool uh bitcoin uses ecdsa specifically the uh step 256 k1 curve
Absolutely.
for transaction signatures shores algorithm once we get a sufficiently powerful computer
it breaks ecdsa entirely it's not weakened it's broken uh so the nuance matters if you use a fresh
address for every transaction and never reuse public keys, you're better protected because the public key is only exposed briefly during that transaction.
But roughly a quarter of all Bitcoin sits in addresses with exposed public keys, either because of key reuse or because the keys are already public.
That's a non-trivial amount of value at risk.
That's a non-trivial amount of value at risk.
So Bitcoin mining runs on SHA-256.
Grover's algorithm weakens it, roughly having the effective key length, but it doesn't break it outright.
So mining gets harder, but not impossible, right?
For the broader crypto ecosystem, here's what people miss.
Stablecoin infrastructure relies on CLS and PKI for communication and settlement.
All of that is quantum vulnerable.
DeFi smart contracts sitting on Ethereum are signed with ECDSA.
So the entire infrastructure layer needs to migrate.
The bottom line here is that the near-term risk for crypto is narrative, not an actual break.
Whereas, you know, for kind of TradFi and
everything else, it is more the actual breaking. But the near term risk is that, you know, you get
all this fear talk and all this fear mongering, and that is going to kind of, you know, scare
people out of crypto or scare people out of the space entirely. But we're years away from kind of
anything that can crack live traffic on that side.
The trade is in the company solving the quantum problem,
I believe, not in the panicking about Bitcoin being broken.
That's my opinion.
There might be others that disagree with that.
But so all that is kind of to lay the framework
of where I'm coming at today.
And so let me walk through sort of the investable names in the space.
You have CrowdStrike, Palo Alto, Fortinet, Zscaler, Darktrace, Vales.
I'll run down just kind of briefly for each one.
CrowdStrike, this is going to be your growth story.
Net new ARR was up 73% year over year in their Q3 fiscal 2026. The Falcon
Flex model is driving larger kind of stickier deals with Flex up about 200% year over year.
They're expanding well beyond endpoint into cloud security, identity, kind of AI threat direction.
The risk there is obviously the forward earnings. You're
paying like 103 times forward. That's very expensive. I think we all can appreciate that
that is a very expensive name, but that's one of those ones where you kind of have to look at that
market that I talked about in the beginning and really weigh the cost there. And there might be
better entry points from a technical perspective, but that's just one of those names that I think is going to be around.
spent roughly $28 billion on acquisitions to build autonomous, self-healing security
ecosystem.
Q1 of this fiscal year, revenue was about $2.5 billion, up 16%, with next-gen security
at $5.9 billion, growing up 29%.
The strategy is working, but growth is decelerating on a headline basis.
So platform integration, I would say the biggest risk there is going to be kind of on the execution side.
Can they get it done? They're targeting 15 billion by 2030.
That's pretty ambitious. So you might be seeing some some lower targets at their next their next earnings call.
That's something to watch kind of in the Palo Alto name.
It's just they have a lofty goal.
If they hit it, that's a huge upside.
If they don't, you might catch it on the chin during earnings season.
Fortinet would be more like the value play, I think.
It's kind of your network security backbone.
It's protecting over 500 of the Fortune 1000.
Revenue growth around 14 uh so it's the slowest of those four us names but it screams the cheapest so it's kind of
the opposite of what i was talking about with palo alto where i mean it was crowd strike excuse me
where you know it's it's not growing to the nearly at the same rate but if you're looking for a value
name in that space that's a decent one to look at um the question rate. But if you're looking for a value name in that space,
that's a decent one to look at.
The question though is kind of whether their hardware model
holds up against these cloud native competition
that a lot more are moving towards in the space these days.
Zero, Zscaler, this is kind of your zero trust pure play.
Over 3 billion in AR are growing above 25%.
Their zero trust exchange processes 300 billion transactions daily.
The concerns there is that the billings are decelerating and they're still gap on profitable.
So, you know, that's going to be kind of your high fire.
And in a higher rate environment, the gap on profitable does matter more uh so i mean definitely
do your due diligence on all these these are just the names i think are broadly you know macro
related i want you to just have them on your on your on your viewpoint uh dark trace would be the
last one i want to talk about the the UK EU kind of AI native play.
It's self-learning anomaly detection.
It's differentiated because it learns from your specific business data, not from generic
threat databases.
The complication is they went private with Thoma Bravo.
So the visibility is limited for kind of public market investors.
But if you can potentially get in there, it's conceptually AI for defense thesis in its purest form.
So even if you're not, you can't, you know, get invested in that from a private standpoint, I just think it's a name to watch, watch what they're doing, be on top of kind of how they're growing and how they're attacking it from the AI perspective.
I think they're going to be just kind of a name to monitor from that
regard, if anything else. And then so if I'm just connecting all this back to kind of the
macro framework, you've got three pillars here. It's your equities, your cyber infrastructure,
and then your crypto digital asset. They're not separate conversations. They're all the
same conversations, just different pillars.
On the equity side, consolidation is the dominant theme.
CrowdStrike, Palo Alto, they're fighting over who owns the security stack.
Fortinet and Zscaler kind of hold specific niches.
And then Thales owns kind of the PQC migration infrastructure.
On the infrastructure side, AI-powered security operation centers are becoming the standard.
Zero trust is really no longer optional.
Post-quantum migration spend is about to ramp, and regulation is creating kind of hard spending
force, particularly the, what was it, the EU Cyber Resilience Act.
On the crypto side, ECDSA vulnerability is kind of a known risk, but it has an unknown
timeline.
Like I said, it's not today that the risk is there. It's kind of a longer term. But the narrative is what people
are kind of sticking to. And I think that's the wrong way to approach it in the crypto space.
Stablecoin infrastructure has the same dependencies as traditional finance, but
DeFi attack services are expanding. So institutional custody requirements are just going to get stricter.
The connecting thread is really...
That's very interesting.
That was a lot of information.
And thank you so much, Lighthouse.
I see that FromValue has his hand up.
Would you like to enlighten us a little bit?
Yeah, no worries.
We can circle back around later on those crypto stuff as well.
We just want to make sure everyone else gets their voice in.
So FromValue value go for it yeah well i uh i like the the the elaborate uh you know introduction
here i i think that we have a um you know a great intro here because i think um i think many people don't realize what's what's happening now um what i wanted to
add was two more names actually um that will benefit from uh the trends that have been have
been um uh you know named here and uh i the first one is is is cloudfl. I already mentioned it last week as well.
So if you look at revenue,
its growth is accelerating.
So it's about 34% in the last quarter, I think.
And RPO.
So, you know, the amount that is under contract actually, but cannot be recognized as revenue yet, was up almost 50%.
And current RPO was about the same as revenue growth.
So 34% current RPO is the, you know,
the RPO that will be recognized in the next 12 months.
So you see that Cloudflare is definitely, you know,
doing very, very well, and it will only accelerate.
They are very, very adaptive as well.
So I think if I remember well that they
they had almost a thousand product features updates and new products in 2025 so you know a lot happening there great management team as well with Matthew Prince as the founder and CEO.
And I forgot her first name, Zatlin.
She's a very good CEO and president.
And then the second name I want to mention is Rubrik.
Because Rubrik does something that no one else does.
And what they do is exactly what was mentioned.
They look for those anomalies in the data in real time.
So, and if there is a breach,
they can go back to the second before that breach
or half a second or whatever.
And then
you start rolling from there
almost immediately.
So the example was
Home Depot
was hacked.
The hackers asked
I think if I remember, 5.8 million.
And Home Depot was a Rubrik customer.
And they were back online in 2,200 stores in the US within 45 minutes.
So that's what Rubik can do.
And they could say to the hackers,
we don't need the data anymore.
Buy, we don't pay.
So I think that's a very valuable thing as well.
It's growing like weeds.
It's last quarter, revenue growth was 48%.
And it's an over deliverer and i think
right now it's it's actually very cheap uh you know if you compare to to the growth uh of course
uh it's still um unprofitable on a gap basis, if I'm correct.
I think so.
But, you know, that won't be a problem.
It's just a matter of choice.
For the rest, I've been long, CrowdStrike and Cloudflare, actually, since 2020.
And I couldn't agree more about CrowdStrike.
I think it's probably, together with Cloudflare,
I would say the best name in cybersecurity.
So those were the things I wanted to add.
Amazing.
Thank you so much for the information.
Also make sure to follow Lighthouse Macro.
He has a wealth of knowledge, LH Macro.
And the person you just heard was from Value,
two really great people.
Now, I see that Jonathan held their hands up here.
Just one more thing.
For the people who don't know me and many, you know, I don't know.
My name is Chris Hendricks.
I'm from Belgium, and I have a service called Potential Multibarious.
So just to introduce me, I should have done that first.
All good. Lovely. Good to meet you chris yeah go ahead go ahead matt
yeah thank you uh i just uh i just wanted to start out with saying that i'm not the technical guy in my fund uh so i'll be talking a little bit about technicals here,
but I am not the one that knows the most of it.
But I think to zoom out again,
and then look at the cybersecurity industry,
where we come from.
We've been through a couple of technology shifts.
We've had the on-prem where we had our own PC at home.
On-prem was at home or in the company
and we had a firewall, et cetera.
And then we had a technology shift
that has been lasting for the past 15 years
with the cloud migration and data being moved to the cloud.
Then we had the COVID virus,
where people suddenly needed to start working from home.
SetScaler was the only business that really had a good product
to secure that need to stay at home and work.
And now I find that we are in this technology shift again. A lot of businesses will be running
on GPUs and not on CPUs in the future. And I think it remains to be determined whether the best place there will be on-prem or it will be in the cloud or however that will work out.
And I think that makes the cyber security space a little bit hard today because it's always been so
that for every technology shift you've had a new batch of companies that came out with a new
a new batch of companies that came out with a new infrastructure
and that was more fit for how technology was faring.
And a good example is CrowdStrike, which was built on data storage on-prem, where Sentinel-1 came and had the Singularity cloud,
and they hosted the data in the cloud.
And we had a thesis that that might make Sentinel-1 a better investment than CrowdStrike,
and it turned out to be wrong.
It was like Sentinel-1 never really got to the point where they had the scale
to compete, and maybe they will. But yeah, I just wanted to highlight that I think that the sellout
right now in cybersecurity is a little bit warranted because it's very difficult to project which companies will win on the long
run. You have Palo Alto Networks, which their CEO has done a tremendous work pivoting them from
legacy business selling physical stuff to a cloud business,
cloud cybersecurity business, a platform like Lighthouse
explained where they have everything.
And they've been doing that by buying new technology companies
with the newest technology and adding that to their system, but it still contains a significant execution risk
to be able to do that in the future.
And thus the variance has just increased a lot.
And I think that creates some uncertainty.
And I think maybe Lighthouse could, has an opinion about this technology shifts
and how the companies he highlighted would be prepared for that technology shift.
Or somebody else?
Yeah, some great points there.
That actually brings me to another question.
So when you look at those crazy numbers with, you know, over 2000 attacks a week, malicious
emails, right?
So you're talking about software stuff as well.
Does cybersecurity feel like more of an insurance or even a growth sector to you now, right?
Insurance has got to be on the table.
Jonathan, I see your hand up there.
We'd love your insights on this from maybe a crypto perspective as well.
Yeah, sure.
Thanks.
Yeah, very good speaker so far.
I think just to answer your question first,
I think it's both.
It's growth and insurance.
I mean, insurance because everyone needs it
and growth because it's tech.
But just probably what I could add here
is I think maybe summarizing the macro theme
and then looking at the general technicals of the market itself.
And then I can also add, I mean, it was very well explained before,
technically, but I can add maybe a game theory angle on the Bitcoin side.
Yeah, absolutely.
So, you know, firstly, obviously, just to summarize everything,
like AI is, it's going to, and quantum, et cetera, all of these things,
it's going to increase both the scale, all of these things, it's going to increase
both the scale of attacks and the need for stronger defense. So
so that means as the other speakers have said, cyber
security, obviously becomes necessary for everyone. It's not
just optional. So it is structural, I fully agree with
that. The stats Lighthouse said, I mean, they are, you know,
they open open up a lot uh
information on that and support that um and the regulations is the other thing we've got
to consider because obviously as other speakers have said the regulations make it um very important
especially in europe for example where they have things like gdR, they're going to be having to spend money,
rather than maybe in the US, they also have regulations, but maybe they're going innovative
there, potentially. So overall, it's good for security companies long term, or any company
that's involved in somehow benefiting from this. So if companies are going to spend money
on them, their products and their
services, that's going to be good for those companies' revenue in the long run. Now, as Mad
said, which I agree with, it's very difficult to figure out who's going to win this race.
There might be a handful of them. And the threats of cybersecurity and and ai it's evolving so quickly that it is just very difficult
um so in my mind the best way to do this is to look at the index uh look at an etf potentially
that is a basket that you can get quite a few different names in the closest thing i could
find was the first trust at nasda cybersecurity ETF. That's a CIBR.
Now it's not a pure play cybersecurity.
I mean, it does have things like Broadcom in it,
which is its biggest holding of 7.8%.
But if I look at the holdings now, I mean, Palo Alto Networks
is 7.2%, CrowdStrike is 6.5%, Thales SA is 4.9%.
And there's another one, Akame Technologies,
I don't think we brought up yet, also in the cybersecurity 4.8%. And then 14nets is about 4.9 and there's another one akame technologies i don't think we brought up yet also in the cyber security 4.8 and then 14 it's about 4.4 so there's a few big names in there and i haven't looked in
detail at all of them but if i look at the individual price charts of some of these tech
names or cyber security names they've all kind of fallen they've all had a big big pullback now
if you take this index it's kind of matching the general trend of all of
those. Some are slightly different, but generally, the
index looks fairly similar. Over 10 years, that NASDAQ
cybersecurity ETF, it has returned 300%, which is about
15% annualized, which is actually really, really good.
But if you compare it to the NASDAQ, that's done 500% over the last 10 years,
which is about just under 20%.
It's just about beating the S&P 500, which has returned 250% over that time.
So it has gone up nicely, and the space has been moving quite well, but it hasn't run ahead of other things
if I then look at more short term you can say okay well in October which is actually when
Bitcoin pulled back and I don't know if there's any correlation with this but
in October they had a this ETF had a big crash basically and it's down about 30% since October.
And if you look at the chart,
it's kind of made these big spikes down
and then carried on going up.
Now I look at Bollinger Bands technically,
whenever I trade or look for entries,
and the Bollinger Bands are extremely wide right now
on the weekly charts.
And so that means it's been a very, very volatile downward move.
The candle that opened this week is actually fully below.
It opened below the bottom Bollinger Band.
It went further down, and then it's still below it right now.
So to me, that suggests the drop is just very, very extreme.
It's a massively volatile, extreme fear drop
relative to other times in history. And depending on, you know, your long-term view on the space,
if you believe in something structurally long-term, then buying in those extreme fear modes,
or at least adding to your position, can work
out well for those willing to take out the risk. In the past, it's hit its 200-week moving average,
which has held quite well its support over the last decade, but that's only about 11%
from current prices. So it's kind of like, how greedy do you want to get if you're looking for a long-term entry?
So that's just a technical wrap-up of everything.
And then for the Bitcoin side of things.
So, yeah, I mean, the technical side, all very well explained.
The other thing I would say is that there's a game theory angle to this.
So there's a game theory angle to this. So if bad actors could hack Bitcoin with quantum computers and some clever AI, then their robbery would effectively maybe not destroy the Bitcoin price, but it would reduce it is very secure. So essentially, these bad actors would be left holding an asset or trying to sell an
asset that would be falling very quickly in value. Because,
you know, you've got to think what would they what would they
do? If I had a quantum computer that was extremely powerful,
in a few years time, I'd probably try to reverse
engineer Satoshi's wallet with 1 million Bitcoin in
it. And if that had to happen, that would get found out very,
very quickly. And the network would find out, Twitter would
spread it. And that would just be left holding a bag of Bitcoin
that you can't sell effectively. So there is a game theory element to Bitcoin security that I don't think is there with
like, for example, trying to, I guess, if you're trying to hack a bank or hack data
from a company, that if you have the money from a bank bank because you have quantum computers and AI and special technology, the value of that money acts as an additional protection layer that doesn't exist with typical tech companies holding data or banks holding funds.
So just wanted to add to that.
Yeah, some very interesting thoughts there.
And a couple of questions I had in my mind is, you know, we talked about quantum as a potential threat to Bitcoin security and obviously data as
well, more so than ever. How real is the risk in your guys' views and what sort of post-quantum
roadmap should serious crypto projects really be building, right? That's the question really
for these companies. And also like for crypto heavy investors, like what's a sensible way to
really hedge that protocol and wallets, right? I know Lighthouse talked about not using the same address, multi-sig wallets, cold storage
maybe.
Or does it also mean owning a sleeve of the crypto picks and shovels like auditors and
custody providers and cyber platforms?
So I would love to hear your insights, either Nat Nat or Taj, whoever wants to go first.
Yeah, so I think Taj has his hand up first.
Is it okay if we go to him and leave your company?
Yeah, for sure.
Go ahead, Taj.
Yeah, no problem.
It's funny because when I looked on the screen, I thought NatNat had dropped down.
So I was like, oh, man, either technical difficulties or you have to run.
So that's really funny.
X is doing what X does.
But as far as
you know a couple things i just want to add on to uh the thoughts there well first and foremost like
for a while now there has been this like whole theme of quantum resistant blockchains and i think
it was a lighthouse that went first that basically said that like the actual structure of the
blockchains and all that stuff the security of the blockchains is not directly at risk especially if you know when
you you're not doing transactions it could be a fresh wallet that's just receiving and what have
you but um what i really want to put into the context of is like there there's always that
next thing in the narratives that uh circulate through crypto is really market
marketing driven. But when you actually look at the actual data, like, you know, we're just
talking about banks and all these different things, right? If you're looking at, say,
the entire crypto market, the entire sector of $3 trillion, well, that's flowing through
TradFi on a daily basis, right? So if I had a quantum computer, like the only reason why I would
personally look, assuming that I'm like this villain with a quantum computer, look at Bitcoin
or having that as the attack, point of attack, it would not be for the monetary value. So like
when people talk about, oh, Bitcoin's going to be brought down by quantum computers and so forth.
Well, if you had that power, the only,, it wouldn't be driven by what you could actually gain
because we're talking about nuclear codes, bank transactions,
like the stock market is such a bigger target to go after.
However, on the flip side, because once, you know,
being in a lot of these discussions with Bitcoin and crypto people,
the person or the state that would do that would not have to be financially motivated.
Just to use like a dumb analogy is those of you that seen Dark Knight, you know, the Joker,
right? He didn't do it for the monetary gain. He did it for the chaos of it. So now if you were a
state that was adverse to what is happening within crypto and you weren't financially motivated
because the whole game theory thing is under the belief that if you attack the chain, you attack
whichever thing, all the value is extracted by breaking it. Therefore, it goes to zero.
Well, if you're not financially motivated, that's the only way in which you would do it. So like
the attack for a blockchain, I don't think is going to come from
some some uh you know some group or even like the lazarus group out of north korea that's trying to
extract monetary value and hold the chain ransom and all that because attacking it and breaking it
decrypting it would take away the value however on the other side if you were a nation state that
was for whatever reason against this technology,
and it was not about the money that you're going to extract from the chain, but just to
discredit and spread fear and certainty and doubt in it, then you could look at it from that
perspective. But like, you know, we talked about all the different names, all the companies that
working on different things and so forth. So I don't really have anything to add other than,
you know, the fact that the theme of quantum resistant
and all these chains,
there's always going to be someone launching
the next quantum resistant chain,
the next more secure,
the next Bitcoin killer, if you will.
So don't even look into that.
I would say be wary of that
because if nothing else,
anyone can spin up a chain and they have a marketing
department that has some influencers and they're making this whole thing look like it is the next
best thing better than electricity. You know what I mean? So I, you know, from the thematic
standpoint, just listening to what's going on, it's a very different conversation that's happening
in crypto circles. And we're talking about crypto investments and blockchains and all this technology and being quantum resistant because
the fear is not that wallets are going to be hacked and co uh you know um uh uh private keys
are going to be showing up on you know random places because quantum is going to unlock that
like honestly the the the biggest fear right
now is just people doing dumb things. Like, you know, last thing I'll say before I just end the
plane, cause I'm all over the place right now. I'll land the plane is, uh, the biggest threat
right now that's going out within crypto circles is a mail order scam. Like they're sending out
fake letters from Trezor and ledger and all this stuff. And people are being socially engineered
to give out the information that is way bigger threat right now within Bitcoin crypto circles.
And I think personally, the quantum risk. And if you listen to Kevin O'Leary, Mr. Shark Tank,
Mr. Wonderful, he's saying that a lot of banks are resistant towards Bitcoin and all this stuff
because of quantum threats. Yes, that might be true, but they have more to risk.
So I don't necessarily think that that is the big thing.
And whoever mentioned October, that big dip, it was all across every single crypto.
And it was October 10th.
You can look at that whole bunch of foolishness happened behind the scenes that had nothing to do with quantum.
And I'll just land a plane there and pass the mic.
Lovely.
I have to agree with Taj there.
Maybe it seems like it's a little bit overhyped, the risks, right?
Because most experts seem to agree that, yeah, well,
if a threat comes out, it won't be something that is so far along
or so far out from what the experts in these fields are already doing.
So it's something that they should be able to fix in a relatively short amount of time
just because of the competition in the industry.
And also regarding what Jonathan said about cyber, yeah, it pulled back almost 75% between
the 52 week high, and 52-week low
and sitting on the monthly one Sigma.
So it looks like a pretty clean trade there.
So with all this said,
why do we think that the cybersecurity sector did such a pullback?
Yeah, I would love to hear Nat's thoughts first, and then we can head over to Joe for
that.
Yeah, thank you so much, Eva.
I think Taj brought up amazing, amazing points, and so did all the other speakers.
In the crypto space, there's not a big quantum fear, as Taj mentioned, right?
Our fear right now is exactly what he said, right?
There's a big mail scam and a lot of people
have unfortunately fallen victim to it.
But if you are worried about quantum
and it's something that you want to hedge against
or protect yourself against,
but at the same time you are a crypto investor
or you
like investing in crypto. One of my favorite tokens is HVEDA Hashgraph. It's not blockchain
technology. It is Hashgraph technology. And the Hashgraph technology, it is highly, highly
resistant to quantum threats. They use SHA-384, and that's believed to be
secure against any quantum attacks, right? But they've also been actively upgrading to
post-quantum cryptography, including partnerships with CEDASQ for quantum-resistant hardware,
right? And this is not a new token. And HVEDA Hashgraph has been around for some time, right? And they're considered,
you know, top-notch security, quantum resistant. And a lot of what, let's say, for example,
if we do, absolute worst case scenario, if we do get that quantum attack, I think Hiveda is
positioning themselves at the forefront of it. And I would probably see them coming out
being the leader in any kind of quantum attacks in the future, because they do have that technology,
they have that built-in mechanism that they can always revert to it in case of any quantum
attacks. But that aside, in the crypto space, as Taj mentioned, there's not really that quantum
fear. It's more the fear of other things, right? Especially as, you know, we enter a bear market.
Every time we're in a bear market, there's something, right? Hats get worse,
scams get worse. So I think that's at the forefront right now in the crypto space.
I love that. So being way more vigilant in
your emails, don't click on any suspicious links, always go through the official channels, even if
the email looks authentic, they are very good. I would say I've got nearly caught out one or two
times. It was almost identical. And I used to come from a visual effects field. So let me tell you,
I can't watch movies as they used to be. So I can spot graphics and different things.
And they're very, very sophisticated.
So always go through the official channels.
And even when you're Googling a link, be very careful on the links because they can market.
And as Taj says, if you have a very good marketing company, they can target your SEOs and do all very, you know, more advanced marketing strategies as well, which is also my
background is marketing. So that's how I know all these things as well. So we have to be careful of
love to go back to Joe. I know you had your hand up there as well earlier. You want to touch on
some things. Yes, certainly. For those that don't know me, my name is Joe. um my background is all in uh software engineering quant and um mathematics and so to
look at the cyber security stocks and why we had that recent dip um crowd strike is down almost
over 30 from their highs and we had those two really nasty candles last week and monday um
why that why did that happen we had um those head a headline from Anthropik,
the creators of Claude and Claude Code,
that basically said that Claude Code will be able to,
now we have Claude Code security.
The market took that as that's going to disrupt
the entire cybersecurity system.
And in my opinion, that could not be farther from the truth
because of just what these companies do i group it
in my mind as um a big three um as crowdstrike cloudflare and rubric um they're not in comparable
sizes rubric is a tenth of the size of cloudflare but when i say big three
crowdstrike secures the individual devices cloudflare secures the internet and rubric.
Make sure that you can always roll back if you do get breached in any sort of way.
CrowdStrike is per device on their Falcon platform.
The way that works is that a device will have a Falcon agent on it.
I hate that word because we think of AI.
But it'll have a Falcon agent and it'll run diagnostics and
monitor the entire system and send that information back to the cloud and the CrowdStrike cloud
will do all those computations to make sure everything's in order, send it back to your
individual computer. Cloudflare will secure the internet with firewalls and distributed
denial of service attack absorption and the content delivery networks.
They made the internet faster before they really secured it.
That was their original business.
And then rubric is data rollbacks, right?
So immutable data backups.
You cannot change it once it's backed up.
It is that and very, very fast rollbacks, right?
The slowest part of the rollback process is the human element of what just happened,
not necessarily that we don't have
the technology in place.
None of those things are what
Anthropics Cloud Code Security will do.
The security feature in Cloud Code
would scan a code base
and ensure that there's no vulnerabilities
in something programmed.
Certain things, like if you were to have
a field on the
internet where people can input text, there's methods right now to make sure that no one can
input a command. So that way, when it gets back to your code, it would execute some sort of command
on there. There's existing ways to prevent that. Memory detection, memory corruption bugs are
something that are very easy to code sometimes, where you could allocate a certain amount of memory index outside that memory, you get a segmentation fault, you get memory corruption.
If you try to do things in your program to memory that you think is there and CrowdStrike, even if you have your entire
tech stack and you just write bad code, it would show up.
And that's not the problem that CrowdStrike is trying to solve.
It's not the problem that any of these, any of those three names that I mentioned are
trying to solve.
It's just another tool in your tool belt.
I think that the sell-off is from a headline perspective, what Anthropic said is entirely overblown.
If you look at it from the fundamentals like some of the other lovely speakers do,
then you could maybe find an issue with CrowdStrike's valuation.
But based on that recent headline, I think it's entirely overblown because the product doesn't do what these companies do.
And also, just to add this with the cryptocurrency perspective here, the elliptical curve digital
signing that is done is done to verify transactions and you need both keys.
And so from that signature, you could go through and get both the keys involved in that transaction.
go through and get both the keys involved in that transaction and so yes it's entirely
i also thought about the dark knight taj when you were mentioning that it's just
it would just be pure chaos it wouldn't be for any monetary gain
wow we some very technical coverage i love that perspective and yeah i mean it does come back to
another question like with cloudfeb you protecting the Internet, as they say, and also NET.
There's been a lot of outages recently, and it's like they're the two big conglomerates.
And, you know, what are they really doing to fix the root cause? Right.
And there's going to be more and more frequencies of this going on.
Mads, I see your hand up there. And I've also pinned in the nest up there, by the way, Jonathan, thank you so much for posting the Bitcoin article
that I've pinned in the nest. So if you guys got a lot of info, post them down below in the chat,
and I can pin that. And any questions you guys have, shout out to all the speakers here today,
Mads. Yeah, I want to circle back to the thing about the sellout and I think it's relevant.
There are two things. So if you look at on a portfolio level, when you put a lot of stock
in your portfolio, if they have a high variance, your portfolio gets a high variance and and that that that gives
variance drag on your portfolio so your geometric returns will be worse than you anticipate if you
just look at each stock's risk reward outcome so what happens is that that that investors look at the perceived variance down the line.
So how risky is this and how uncertain is my investment thesis on this stock?
So you can have a period in time where people believe that the variance,
the idiosyncratic variance of the individual stocks in my portfolio is really low.
of the individual stocks in my portfolio is really low.
And we come from a long, long period of that with cybersecurity and SaaS, etc.
And suddenly the perceived idiosyncratic variance suddenly increases right now.
And that means that you have to sell these stocks from your portfolio.
You have to decrease the overall perceived variance of your portfolio,
otherwise you will be hurt.
And a news like the Anthropic News on cybersecurity,
I totally agree with Quant here.
It doesn't matter for the cybersecurity stocks,
but it do change the perceived idiosyncratic variance
of the cybersecurity stocks in individual investors' portfolios,
and thus they have to sell out.
And these investors are probably also investors that have thought
that their Salesforce stock was really just low variance
and they could draw a line like 15 years out in the future.
And suddenly they get in doubt where this stock will be in just two, three years.
And therefore, their total variance of their portfolios are just increasing.
And that means that you're selling out.
We saw the same in 2022.
You can sometimes have this that people are not looking at their tech stocks,
they're just selling and it's just stupid.
But when you look at it from a math perspective and imagine
that they have a concentrated portfolio,
then it suddenly makes somewhat sense.
Then the other thing I think speaks for
is the same thing, actually.
I think the technological development is going so rapid right now,
and we really don't know which cybersecurity companies
will be the best of breed cybersecurity companies
in just three, four, five years because we don't quite know where technology is taking us.
And therefore, it's hard to have Palo Alto networks.
I think it's trading at a P of 40, something just to give a sort of a framework.
And it grows 15 percent. and you have the execution risk,
you have the uncertainty of where technology is going.
And is that really, is that the price that you can pay?
So I think that that could be way, way further down because of the unpredictability.
And then if you look at it just as an ecosystem, like Lighthouse started to
frame, then you have immense growth, but you're not certain to catch that growth if you just have
three, four, five stocks in your portfolio. And I don't think an ETF is the solution,
because ETFs are always, at least if they're market cap weighted, they'll be overweight on the companies
that has been really good and has been really successful,
but will be underweighted
the new emerging technology companies.
So yeah, I think it's just a catch-22 here.
That's very interesting in terms of diversification.
Normally, we would pick an ETF.
So it might be a pool or a mixed bag there i love your insights there from growth yeah i i uh i totally agree with um the
fact that an etf you know doesn't work here um i also agree about palo elto by the way. And then I just wanted to add, if you look at the market, it tells you where the
uncertainty is much less, you know, present. And if you look at the valuation of CrowdStrike and
Cloudflare, indeed, you see that they are expensive. And that's for a good reason because they are not those uncertain
place uh and then the market you know is willing to pay a premium um so yeah i i agree that it's
hard to see the winners and there will be winners who come from the left field and and you know some are maybe not you know even found it but um if you if you
follow this space i don't think it's hard to see that uh crowdstrike and cloudflare and rubric
you know will be the the big winners here uh for those three different types of of you know security cyber security so
um rubric is is probably it depends on how you value because valuation is always very
subjective as well i would never uh value a a growth stock on a on a pe or a forward pe
stock on a on a pe or a forward pe um so but you know i think that and you also have to look at the
the the caps so the competitive advantage periods um so that means so most free cash flow um um
you know uh i can't i forgot the name now so um So I forgot what it was going to say.
So, you know, most valuations are subjective.
And if you look at those companies,
you can see that, you know, usually projections end after five years,
you know, most usually 10 years,
and then it drops to the total growth rate.
And what you see with those companies,
and look at the past, look at Google, look at Amazon,
look at all the great companies of our time,
you will see that they have had a much longer competitive advantage.
you will see that they have had a much longer competitive advantage.
And that's what I think CrowdStrike and Cloudflare will have as well.
Rubrik is least certain there in my view,
because someone else may come in there with a new system.
But for CrowdStrike and Cloudflare, I'm pretty sure I think the market is well
and you can see the valuations.
Yeah, I think there's some fair points there in terms of valuations.
And the market is shifting so rapidly, like any of these companies could suddenly change in their roadmap,
especially now over here in Europe.
We see more sort of post-quantum crypto roadmap stuff.
National plans are being changed as well.
Recently, I've heard and seen where, you know, we can't even have crypto into our sort of tax wrappers.
And that's creating a bit of geopolitical tailwind there as well.
So that's probably enough for another show for sure.
So that's probably enough for another show for sure.
Yeah, I guess with like, you know, AI power, autonomous attacks, scaling up and European infrastructure under siege, like is there a take on bot VS bot dynamic or AI threats versus AI defenses?
Maybe investors should, you know, how could they position in the arms race, right? And I think Lighthouse, you've nailed
down quite a few of the pillars if you wanted to finish elaborating on that, which I've actually
pinned here in the nest, your information. So guys, if you want to, you know, revisit the spaces,
we've mentioned a ton of names, I know, do repost this so you can come back and listen to it and
look at all the research we've posted here from Jonathan and Lighthouse there.
Yeah, so I just want to take a quick wrap up here.
The way to frame this whole conversation, in my opinion, I mean, all the speakers have been fantastic today.
Some of them know angles that I don't know.
But the way I am coming at it is cybersecurity isn't just like a regular sector.
It's a tax. Every company pays it. Every government pays it. But the way I am coming at it is cybersecurity isn't just like a regular sector.
It's a tax.
Every company pays it.
Every government pays it.
And that tax is only getting higher.
It's cybercrime, like I said, the third largest economy in the world.
And AI is making that bigger every single day. So quantum ads kind of a ticking clock element on top of that.
The companies solving these problems have something that most tech names don't, which is a spending for.
That's not going to go away in a downturn.
That spending for has to be there because that's the world we live in and it's only rapidly changing.
And that's what makes this structural, which is kind of how I started this whole thing off.
which is kind of how I started this whole thing off.
This isn't just a day to day trend.
This isn't just a day-to-day trend.
I think you're obviously going to have winners and losers,
but the overall market and the overall space is here to stay,
and it's something to pay attention to.
And I would say within those winners and losers,
all the names we've mentioned today,
all the ones everybody likes and doesn't like,
just pay attention to what they're doing, right?
The developments and what works and what the market is appreciating.
The theme is only getting bigger, but it's good to be kind of knowledgeable about all
these little subspaces and how different companies are approaching the same problem.
That'd be it for me.
Awesome.
Yeah.
Go ahead, Alex. I know you have some things to say. that'd be it for me awesome yeah go ahead Alex
I know you have some things to say
we all
touched on very interesting points
here and yeah I really
appreciate the point about
maybe don't go with an ETF because this
is such a quick changing
space so follow the money essentially
just wanted to add that
yeah totally yeah just to re-highlight
some of the names um we've talked about uh and the why 17 year-on-year attacking surge so ai bots
uh every 19 seconds you know cyber growth um not just the defense stuff so in the eu pqc plans are
being implemented for 2026 for quantum and harvesting now, decrypting later kind of threats.
So IONQ, obviously they just had earnings this morning, which I think originally surged to like something crazy 10% and it's just pulling back here now in pre-market.
Flows in layer three for security.
So securing Earth to space data.
I know we touched on that briefly
in our sort of last show as well so sovereign cloud and quantum vpn something to look in research
into um and of course you've got your us ai defense uh name so your crowd strike which is
your endpoint and then you have um i don't think we talked about it pan w did we talk about yeah
we did um so more platform stuff
and then ftnt is more networking stuff and obviously your c scalers uh even oktar i would
say uh is probably on there as well for your ai defense uh they sort of dabble in that space
and there's sort of more european and uk uh names you got your your Thalus your AI detection HO and quantum defense ATOS as well
is more sovereign and then you have QBTS RGTI so the lesser known names as well and then the ETF
we all mentioned is this the cyber one I think that's a great basket of stocks if you don't want
to pick out headache but again you could want to mix that up with some other similar names you want to get some exposure in.
Because you mentioned this is actually the first time that ETF may not actually work in the portfolio.
If they're too heavy, exposed on the ones that are working, but not quick enough to adapt when the narrative shifts.
So very important
factor there as well and just really pay attention to what these companies are doing um on the
exposure and yeah just their work in the cyber security so lots to touch on we will definitely
revisit this space uh in future as well there's just so much to cover um i might break this out
into two shows i definitely know the crypto crowd uh alone there's just so much to cover um i might break this out into two shows i definitely know
the crypto crowd uh alone there's just so much about hedera as well you know hash graphs ekml
all the machine learning stuff is all that plays on on top uh jonathan do you have any
sort of last remarks we've talked on a lot of stuff here today
um yeah not really that's all for me thanks to everyone very good very good conversation
yeah awesome work from everyone pinned up here in the nest some information again if you want
to revisit the names and the show do repost and like and then you can come back and revisit and
give us a listen we'll be back next week on Tuesday and Thursday again at 7 a.m.
I want to give all of our speakers a shout out.
Leverage shares as well for coming on.
Do give them all a follow.
Incredible information.
And some of them even have their own shows.
So do watch out for that, especially if you're into crypto or if you're into fund managing,
a bit of quantum trading, technical trading.
Give these guys all a follow.
Incredible research next week.
We will actually be visiting how, you know, investors,
they're normally like, I don't know how to pick stocks
or you've given me so much information.
What about visiting a fund or getting professional portfolio management
to maybe help you?
So we'll take a look at that on Thursday next week.
So do join us for that show and then we're going to bring it back home a little bit on tuesday we're going to be
breaking out into different countries so we're going to start off with the italian market on
tuesday we'll have a look at some italian names on the italian stock exchanges and uh see what's
in there um i mean i know there's a few we know on the us ferrari race i'll give them
i'll allow that i will bring some authentic italians on on tuesday so it's gonna be fun
awesome and i will definitely be looking forward to that yeah so if you guys have any shows in
future you would like for us to cover do drop a comment below or send me a dm and then uh we'll
see what we can do for you guys i want to say thank you all for tuning in have a great fantastic rest
of your week we'll be back with the boys with the trading crew uh 9 20 eastern so we're going to be
doing a little short quick break here for lunch and then we'll be back guys have an awesome rest
of your week thank you everyone great show guys
thank you thank you so much awesome thanks everyone bye
