Preparations are currently underway within NATO for the upcoming summit in The Hague, set to take place in less than three weeks. Recently, NATO Secretary General Mark Rutte renewed his call for member states to increase their defense spending from 2% to 5% of GDP. Poland already meets this requirement—being the only alliance member to do so. However, what’s new is a proposed breakdown of these expenditures: 3.5% of GDP would go toward core military spending, and an additional 1.5% would be allocated to defense-related investments such as infrastructure and cybersecurity.
This potential surge in cybersecurity spending represents both an opportunity and a risk for firms operating in the sector. Ahead of the summit, CrowdStrike—the world’s second-largest cybersecurity firm—reported a 20% increase in revenue, a sign that the market is already responding.
Cybersecurity Takes Center Stage
Cybersecurity has remained a constant topic in the media. In Poland, the Cyber Defense Forces—an independent branch of the Armed Forces—are dedicated to protecting the country’s digital infrastructure. The upcoming NATO summit, scheduled for June 25 in The Hague, could mark a turning point in funding for this field. Secretary General Rutte’s proposal to raise annual defense spending to 5% of GDP includes a significant 1.5% earmarked for infrastructure and cybersecurity investments. That translates to nearly $100 billion in annual investment momentum.
The Market Responds
For the cybersecurity sector, this is a clear signal: more money is coming. Investors have already picked up on the shift. Shares of cybersecurity firms have been on an upward trend, and the latest results from CrowdStrike suggest the growth is far from over. Despite still dealing with the aftermath of a major system outage in August 2024, CrowdStrike managed a 20% revenue increase in the last quarter alone. In the long term, the incident is seen as a temporary setback that hasn’t derailed the company’s upward trajectory.
Scale Matters
In cybersecurity, size affects how business is done. Major clients—governments and large corporations—prefer a single, integrated provider. This approach reduces risk, simplifies management, and speeds up the implementation of protective systems. Palo Alto Networks and CrowdStrike are currently leading this model. However, tech giants like Microsoft, Broadcom (following its acquisition of VMware), and Google (which has reportedly offered $32 billion for Wiz) are increasingly entering the space.
That said, these integrated players do not publish separate financials for their cybersecurity divisions, making it difficult to assess their real market share.
NATO Summit as a Launchpad
Palo Alto, a key supplier for U.S. federal agencies, may use the NATO summit to expand into new markets. CrowdStrike, with a more international footprint, could also benefit—particularly if European nations respond to the call for greater cybersecurity investment. The only potential risk lies in the unlikely scenario of a temporary spending freeze by the U.S. government.
Smaller Players: Agile and Attractive
It’s also worth noting the growth of smaller companies. Firms like Zscaler and Cloudflare—with their more flexible service offerings—are growing faster than industry giants. Their tailored solutions often better match the specific needs of clients, making them attractive options in certain niches. For investors, these firms represent promising opportunities. The cybersecurity sector thrives on growth. If the investment momentum continues, there will be room for further valuation increases. If not, some companies could prove to be overvalued.
Ultimately, much will depend on the decisions made by NATO leaders in just a few weeks.
Author: Paweł Majtkowski, Analyst at eToro Poland
Source: CEO.com.pl – Original Article
