Cybersecurity ETFs took a hit Tuesday after Palo Alto Networks Inc. (PANW) announced it would acquire Israeli identity-security firm CyberArk Software (CYBR) in a $25 billion deal, one of the largest acquisitions ever in the cybersecurity space.
The $10.1 billion First Trust Nasdaq Cybersecurity ETF (CIBR), the $2.3 billion Amplify Cybersecurity ETF (HACK) and the $1.2 billion Global X Cybersecurity ETF (BUG) were each down around 0.8% midday, recovering from earlier declines of as much as 3%.
The volatility followed the move in PANW stock, which fell as much as 8.9% after the deal was confirmed before paring losses to last trade down 5.3%. The stock had already dropped 5.2% the previous day after the Wall Street Journal first reported on the potential acquisition.
Palo Alto Networks is a major holding across all three ETFs. It is the third-largest holding in CIBR (at a 7.7% weight), the third-largest in BUG (at 5.7%) and the sixth-largest in HACK (at 5.3%). Meanwhile, CyberArk also carries meaningful exposure in these funds, with weights in the 4% to 5% range, despite its smaller market cap.
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The deal marks “Palo Alto Networks’ formal entry into Identity Security, establishing it as a core pillar of the company’s multi-platform strategy,” the company said in a press release. “Combining CyberArk’s long-standing leadership in Identity Security and Privileged Access Management (PAM) with Palo Alto Networks’ comprehensive AI-powered security platforms will extend privileged identity protection to all identity types, including human, machine and the new wave of autonomous AI agents.”
Investor interest in the cybersecurity theme remains strong. CIBR has pulled in $1.4 billion in inflows this year, BUG has added $175 million and HACK has gathered $157 million.
Performance has been solid across the board in 2025, with CIBR up 16.7%, HACK up 15.6% and BUG up 10.4% year to date. Over the past five years, CIBR stands out with a 111% gain, compared to 80% for HACK and 64% for BUG.
Palo Alto Networks now commands a market cap of $122 billion, making it the largest pure-play cybersecurity firm in the world, just ahead of CrowdStrike Holdings Inc.’s (CRWD) $115 billion market cap. The addition of CyberArk further solidifies its position as one of the industry’s dominant companies.
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