CyberSec/Computing Industry Q4 '22 Overview and Commentary
It may just be that the market deities have heard our prayers. After unceasing YTD losses for NASDAQ, Q4 has provided a dose of much-need upside for embattled tech investors. Over the past month, QQQ is trading +6% in what sets a bullish baseline for the rest of NASDAQ. The broader rally in US tech equities is likely motivated by a number of factors, including a recent slowdown in Fed Reserve rate hikes, a surge in consumer spending around the holiday season, and a slight improvement in macroeconomic sentiment. Given these nascent yet promising signals, I want to examine their impact on an assortment of equities in the cybersecurity and computing industries.
Clustered around QQQ's trendline are a number of cyber mainstays that have closely tracked the market's recovery over the past month. For instance, Palo Alto Networks (PANW) is +4.33% and Hub Security (HUB.TA) is +4.71%, whereas cyber ETFs like BUG (+3.4%) and CIBR (+5%) all witnessed bullish price action movement. Though these players came in slightly behind QQQ's monthly performance, their single-digit gains are a strong testament to both retail and institutional demand for cyber security equities, particularly in today's world of increasingly sophisticated and frequent cyber attacks. HUB specifically has tracked impressive growth over recent weeks due to forward regulatory progress regarding its impending SPAC listing on NASDAQ via RNER.
The outlier of the field is CrowdStrike (CRWD), which slumped some 20% on Nov 30th in response to disappointing Q3 financials. A general conclusion we can draw from these findings is that overall, investors remain bullish on cyber security in the LT even if they are feeling more skittish about underperformers in the ST.
For the sake of comparison, I threw Nvidia (NVDA) and Taiwan Semiconductor (TSM) to see how things look a bit higher up the supply chain. Whereas cyber was up between 3-5%, NVDA and TSM both saw +22% gains over the past month. In my view, we're seeing this strong recovery as a delayed response to the volatility induced by the CHIPs Act gets finally priced in. For the uninitiated, the CHIPs Act was was passed this summer and represents a major federal subsidy to stimulate domestic chip and computing manufacturers. After weathering their fair share of volatility in Q3, chip staples like NVDA and TSM are already bouncing back strong.
Though cybersecurity and computing investors may be enjoying some relief, the market's response to new CPI and FOMC announcements this week may determine the direction NASDAQ assumes through end-Q4. In sum however, cyber and computing equities maintain bullish LT outlooks, and potential dips moving forward present strategic opportunities for industry-specific and tech investors.
Clustered around QQQ's trendline are a number of cyber mainstays that have closely tracked the market's recovery over the past month. For instance, Palo Alto Networks (PANW) is +4.33% and Hub Security (HUB.TA) is +4.71%, whereas cyber ETFs like BUG (+3.4%) and CIBR (+5%) all witnessed bullish price action movement. Though these players came in slightly behind QQQ's monthly performance, their single-digit gains are a strong testament to both retail and institutional demand for cyber security equities, particularly in today's world of increasingly sophisticated and frequent cyber attacks. HUB specifically has tracked impressive growth over recent weeks due to forward regulatory progress regarding its impending SPAC listing on NASDAQ via RNER.
The outlier of the field is CrowdStrike (CRWD), which slumped some 20% on Nov 30th in response to disappointing Q3 financials. A general conclusion we can draw from these findings is that overall, investors remain bullish on cyber security in the LT even if they are feeling more skittish about underperformers in the ST.
For the sake of comparison, I threw Nvidia (NVDA) and Taiwan Semiconductor (TSM) to see how things look a bit higher up the supply chain. Whereas cyber was up between 3-5%, NVDA and TSM both saw +22% gains over the past month. In my view, we're seeing this strong recovery as a delayed response to the volatility induced by the CHIPs Act gets finally priced in. For the uninitiated, the CHIPs Act was was passed this summer and represents a major federal subsidy to stimulate domestic chip and computing manufacturers. After weathering their fair share of volatility in Q3, chip staples like NVDA and TSM are already bouncing back strong.
Though cybersecurity and computing investors may be enjoying some relief, the market's response to new CPI and FOMC announcements this week may determine the direction NASDAQ assumes through end-Q4. In sum however, cyber and computing equities maintain bullish LT outlooks, and potential dips moving forward present strategic opportunities for industry-specific and tech investors.
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