U.S. SMID-Cap Software Cybersecurity: Off-cycle readthrough from earnings thus far

Research evidence excerpt

10 August 2026

U.S. SMID-Cap Software

Cybersecurity: Off-cycle readthrough from earnings thus far

Peter Weed

Luwei Yang

Armin Hadavi, CFA

Cybersecurity includes a lot of off-cycle reporting schedules — in advance, this note reflects

on insights from those that already reported, including momentum signaled by cloud

infrastructure vendors (hyperscalers and adjacent cloud operations software).

Cybersecurity demand is strong due to AI. Our CIO / CISO surveys and webinars show

worries about increased attacks YoY, AI enhanced social engineering, and speed of attack

on technical flaws (particularly post Mythos/Glasswing). AI remains in its infancy, so we

anticipate risks and strategies to address them will remain dynamic… but uncertainty may

create contract length pressure — CIO/CISOs aren’t certain which are the right vendors,

so say they prefer shorter commitments. We can see the impact of this in willingness to

explore VC-backed startups for many new AI security topics in our buyer discussions. But as

Fortinet’s Q2 earnings demonstrated, committed platforms may not see duration problems.

Near term priorities secure AI / protect from AI-enhanced attackers. Protecting from

AI-enhance attackers includes stringent AppSec testing and patching cycles, modernizing

Operational Tech security (e.g., IoT, network attached equipment), and investment in

real-time threat intelligence / response (“ITDR”). Securing operational use of AI (e.g.,

Agents, User-in-the-loop-AI) includes Identity, data protection / access governance, and

communication / email security. ...it also puts some prior priorities on the back burner,

with SIEM, SSE, and Secure Browsers showing poorly in our recent survey. We think this

means landing new customers may be hard right now.

Disappointment potential: most cybersecurity can’t easily see hockey stick

growth, no matter the demand. Even with significant demand tailwinds, many parts

of cybersecurity will have a hard time mirroring the rapid growth acceleration of cloud

consumption infrastructure. The categories of technology that can really hockey stick

are those more closely tied to Product Led Growth (“PLG”) customer self-adoption and

…