Global tech infrastructure is facing many unprecedented forces, and as artificial intelligence expands the world's digital attack surface, cybercrime damages are surprisingly surging and to fight back global cyber defense spending projected to top $1 trillion and the battleground is moving straight into the blockchain.
Now Wall Street may be moving to move assets on chains.
So where is the market.
The convergence of AI cybersecurity.
Well joining me this morning to weigh in is Miller VP of product development for Amplify ETFs.
Good morning.
Thank you so much for joining us.
So cyber crime damages are on track to hit 15 trillion yet global defense spending is crossing 1 trillion.
So give us your take on what we're seeing when it comes to the current cybersecurity model.
Do you think it's fundamentally broken?
Absolutely not, no.
You know, cybersecurity today remains, you know, really one of the key parts of, you know, corporate spending, IT budgets, you know, as they look at more expensive hardware and increasing cybercrime, you know, where are you going to, where are you going to find cost savings, and you're not going to start reducing spending on cybersecurity, and that's one of the line items.
Both on the corporate side and on the defense side that we continue to see growth.
You think about, you know, a company wants to protect all of their data in the same way, government spending.
They want to protect, uh, you know, our digital borders as well as protecting, thinking about, you know, unmanned aerial vehicles, drones, things like that.
That all needs to be protected as well.
And as we think about themes, you know, we look to the intersection of really three main tailwinds.
So I talked about corporate spending, talked about government spending.
On the personal side, starting to see cyber protection included as part of some homeowners policies.
So, you know, personal, government, corporate spending, kind of three main tailwinds there that we think present really durable trends for a theme, especially like cybersecurity.
Yes, I do want to expand on this intersection that you mentioned, and we all know that Wall Street does oftentimes like to mash buzzwords together, and there have been plenty of announcements that are pairing AI with blockchain to secure revenue here.
So what is actually going on here and give us your understanding of what we're seeing at this intersection.
Sure.
So, AI obviously, you know, been very topical over the last several years, uh, but what has been at the center of that topic has changed, you know, last year it was, you know, Nvidia and semiconductors.
Then it moved to power, right, and, and all of this data, um, you know, needs to be secured, uh, you know, AI is, is built on data and so as, as this data needs to be secured, we need to um You know, there, there's, it needs to be verified as well.
And so, you know, we talked about cybersecurity on the on the blockchain side, you know, there's a verification element of it that is critical, um, you know, to cybersecurity as well.
And so blockchain, you know, which is built on Uh, it's blockchain technology.
It's, it, it is built, to create an authentication trail, so you can verify, um, you know, there's really a, a key intersection here, uh, you know, between these two themes.
Yes, and Nate, of course when we're talking about cybersecurity and defense, it's all about national security as well.
So give us your take on what we're seeing when it comes to the governance side of things.
Yeah, on the government side, you know, the DOD defense budget grew roughly 3% last year, but when you drill down into some of the line items of that budget, you know, we saw on the on the cyber defense spending side, that line item grew nearly 15%.
And so it remains to be an area it continues to be an area that is critical, you know, for our government and an area that they continue to allocate dollars and so we would see, you know, the companies that are exposed there as primary beneficiaries.
Yes, and when it comes to artificial intelligence, we're living in a world where AI can flawlessly clone a human voice or video in seconds, and this does make identity a nightmare for authentication.
But there are many systems out there.
So when it comes to a blockchain identity system verifying who is real, when the underlying AI is running circles around core defenses, what is your take on where we are right now and what more needs to be done?
Sure.
I think where we've ended up today is that we're in a zero trust environment, right?
The assumption is, is not, you know, to trust the data and identity coming in, and this could be on the cybersecurity side, you know, AI is being used, you know, to increase the attack surface of cybersecurity, and like I said, we've moved to a zero trust environment and so, You know, you're using AI to help detect attacks, but when you can attach an authentication piece to that, which I think brings in blockchain technology and, and, uh, you know, some of the evolution that's happened there, that authentication piece becomes incredibly crucial.
Um, so again, we're in a zero trust environment, uh, you know, the video.
The images that we see, I think going forward are increasingly going to need some sort of authentication trail to know that that was truly, you know, the image that was taken and not something that was, you know, generated by AI or perhaps, you know, what we see more commonly today, you know, manipulated in some way.
So, you know, it's, it's, it's, uh, it's interesting, it's happening quickly, uh, but it's very exciting.
And Nate, finally, before I let you go, if we throw an agentic AI there, it does even muddy the waters even further.
So if we put autonomous AI agents in charge of, say, locking wallets and freezing assets, that does complicate things.
So when we're talking about a highly regulated industry here, what does it mean from an investment perspective?
Yeah, so the way we would view that is, is, you know, there are going to be multiple winners, um, whether it's AI or or blockchain, you know, we would advocate towards owning kind of a broader value chain type of approach, not just a single security, you know, you can take a lot of.
Of idiosyncratic single stock risk if you try to pick the one winner in, you know, the blockchain space or, you know, the cybersecurity space.
So we would advocate for, you know, taking a little bit of a broader approach, getting exposure to that entire value chain again, whether that's the cybersecurity side or on the blockchain side, so that as you, as we collectively navigate some of these growing pains that emerge.
You know that you're not exposed to the wrong name, but rather the right theme and a broad-based approach.
Well Nate, we will have to leave it there for today, but thank you so much for weighing in and thank you so much for sharing your perspective and your insights.
Thank you.
