Why Cybersecurity Spend Is Surging

In the bedraggled wake of one major data breach after another, board‑rooms and C‑suites across the tech sector are hitting the panic button — and opening their wallets. Spending on cybersecurity has gone from “nice to have” to “must have,” and the numbers reveal an industry that is scaling rapidly in response. In this article I take a deep dive into the surge of cybersecurity investment, with a particular focus on the tech sector: how big the market is, what segments are growing fastest (cloud security, endpoint protection, AI‑driven detection), what forces are driving the growth, how major tech firms are adapting their business models, and how investor and government dynamics are further propelling the expansion.

1. The Big Picture: How Large Is The Market (and how fast is it growing)?

To understand the scale of the surge, let’s anchor ourselves in some of the most authoritative data and forecasts.

Global market size and growth

According to Gartner, Inc., worldwide end‑user spending on information security is projected to hit US$212 billion in 2025, up roughly 15.1 % from estimated 2024 spending.
Gartner earlier estimated that the worldwide security and risk management (SRM) market would reach about US$215 billion in 2024, up ~14.3 % from 2023.
Other sources provide somewhat broader forecasts: for example, Fortune Business Insights projects the global cybersecurity market will grow from US$218.98 billion in 2025 to US$562.77 billion by 2032, implying a CAGR of ~14.4 %.
Another data point: in 2022 the global cybersecurity market was estimated at around US$150 billion.

Regional / U.S. focus

While global numbers provide the context, the U.S. and North America dominate the spend. For instance, Fortune Business Insights states that North America had a market share of ~43.41 % in 2024.
Although precise up‑to‑date U.S.‑only numbers are harder to find from the public articles I surveyed, various “cybersecurity budgets up” surveys indicate that U.S. enterprise spending is rising strongly, often in double‑digits year‑on‑year.

Segment growth forecasts

Gartner breaks out the growth by sub‑segments:

• Cloud security (combining CASB + CWPP) is flagged as one of the fastest growing sub‑segments: in their SRM forecast they projected that combined CASB + CWPP spending would total about US$7 billion in 2024, up ~24.7 % from 2023.

• From a report on sub‑segments: cloud security spending is forecast to grow from US$9.0 billion in 2024 to US$22.6 billion in 2028, a CAGR of ~25.9 %.

• Managed security services (MSS) is also showing strong growth: from US$24.1 billion in 2024 to US$42.1 billion by 2028 (CAGR ~15%).

• Identity & Access Management (IAM) projected growth: from US$17.7 billion in 2024 to US$25.4 billion by 2028.

Thus, the high‑level takeaway: global cybersecurity spending is now in the low‑hundreds of billions (≈ US$200 B+ by 2025), and is forecast to grow at double‑digit rates for the next several years. The cloud security segment is perhaps growing fastest (CAGRs > 20 %). There is a clear “growth turbo” happening.

2. What’s Being Spent On? Key Spending Categories

Spending on cybersecurity is not monolithic — it is distributed across different product types, services, deployment models and threat surfaces. Below I break out a few of the major categories: cloud security, endpoint protection, AI‑driven threat detection, and services (consulting/managed).

Cloud Security

As organizations move more workloads to the cloud (public, private and hybrid), the threat landscape shifts. Mis‑configured workloads, uncontrolled shadow‑IT, identity proliferation, containerization and serverless all enlarge the attack surface. Security vendors and buyers are responding accordingly.

• Gartner: “Spending on data privacy and cloud security are projected to record the highest growth rates in 2024, with each segment increasing more than 24 % year‑on‑year.”

• Further, Gartner reports cloud security spending growing from US$9 billion in 2024 to US$22.6 billion by 2028.

• From vendor materials (e.g., Palo Alto Networks): Their “Unit 42 cloud security alert trends” report found that organizations saw nearly five‑times as many daily cloud‑based alerts at the end of 2024 compared to the start of the year — a strong signal of the threat uptick in cloud.
  Thus cloud security is a major battleground and investment priority.

Endpoint Protection & Detection

Traditional endpoint protection has evolved into endpoint detection & response (EDR), extended detection & response (XDR), and is now converging with identity and cloud workload protection.

• Gartner reports that security software will increase ~15 % to nearly US$101 billion in 2025 (as part of their forecast for US$212 billion total spend) with endpoint protection platforms cited as a substantial sub‑component.

• The point is: endpoint protection remains a core spend category, especially as remote/hybrid work persists and as the “edge” becomes meaningfully more distributed.

AI‑Driven Threat Detection & Response

Threats are evolving (and often using AI themselves), and defenders are increasingly adopting AI, ML, automation and analytics to keep up. While many vendor “AI” claims are marketing‑heavy, both buyer demand and vendor capability are on an upward trajectory.

• For example, Gartner lists AI and advanced automation as a trend in their “Top Cybersecurity Trends for 2025”.

• From vendor commentary (Palo Alto Networks): In “The New Economics of Cybersecurity: Calculating ROI in an AI‑driven world,” they emphasize that the value is shifting from simply acquiring more point‑tools to consolidating and automating via analytics, AI and unified platforms.
  Thus, while one might treat “AI‑driven threat detection & response” as a theme rather than a neatly isolated spend bucket, it is increasingly part of the growth story.

Services: Managed, Consulting and Outsourcing

Not all cybersecurity spend is about software or hardware licenses. A large chunk is services—both internal security operations and outsourced managed services.

• In their 2024 forecast, Gartner reported that “Security services — consulting, IT outsourcing, implementation and hardware support — is forecast to total ~US$90 billion in 2024, representing about 42 % of total security and risk management end‑user spending.”

• This highlights two things: (1) many organizations still lack sufficient internal capacity, so run services; (2) as threats get more complex (hybrid cloud, remote work, zero‑trust, identity, regulatory risk) they lean on external expertise.

3. Why Is Cybersecurity Spend Surging? The Key Drivers

Understanding the drivers helps make sense of the numbers. The investment surge is not simply “more security” but reflects multiple, converging forces in the tech sector and broader economy. I identify four major drivers: rising cyberattacks and threat sophistication; remote/hybrid work and the expanded attack surface; regulatory/compliance burdens; and growing complexity of digital ecosystems (cloud, hybrid, identity, supply chain). Each has its own dynamics.

Rising Cyberattacks and Threat Sophistication

The easiest way into a board‑room is with a scary breach statistic. Organizations increasingly see cyber (and cyber adjacent) risk as a major enterprise risk — comparable to supply chain, third‑party, or geopolitical risk.

• For example, Reuters reported in May 2023 that spending on cybersecurity solutions is expected to rise 12.1 % to hit US$219 billion in 2023, “as more frequent cases of security threats have also boosted demand.”

• The fact that cloud alerts are increasing five‑fold (as noted by Palo Alto) shows that attackers are shifting tactics and pointing at cloud workloads and identities as key targets.

• Also, as AI tools proliferate, adversaries are adopting more scalable offensive capabilities, which in turn forces defenders to spend more on AI/automation (see later).
  In short: the threat landscape is not static — it is evolving rapidly, and organizations are reacting by spending more.

Remote/Hybrid Work, Distributed Perimeters & Expanded Attack Surface

The pandemic forced a massive shift to remote work, and home‑office, BYOD, distributed access and unmanaged endpoints became the norm. Even as “return to office” is underway, hybrid work remains embedded. This transforms the attack surface and changes the security dynamic.

• Gartner in their 2022‑10 press release pointed out three factors influencing growth: remote work, shift away from VPNs and toward zero‑trust, and rapid increase in cloud.

• As endpoints proliferate, as workloads live in cloud or hybrid environments and as employees access corporate applications from personal or unmanaged devices, the traditional “secure perimeter” model no longer suffices.
  Thus, organizations must invest in endpoint protection, identity/zero‑trust access, monitoring of cloud access, remote security posture management — all of which drive spend.

Regulatory/Compliance Pressure & Risk Management

Alongside threats and attack surfaces, the regulatory and compliance environment is tightening. Privacy laws, data protection requirements, supply‑chain and third‑party risk regulations and industry‑specific mandates add to pressure. Security is increasingly not just an IT topic but an enterprise governance and risk topic.

• Gartner’s 2023‑09 press release emphasizes that privacy remains a top organizational priority “as regulations that impact the processing of personal data continue to emerge, including those related to the use of AI.”

• The rise of risk management and governance viewpoint also means boards and executives are demanding more visibility, more metrics, more “security as business enabler” rather than just cost center.
  Organizations realize that a breach means not only recovery cost but regulatory fines, reputational damage and business interruption — so they spend accordingly.

Growing Complexity of Digital Ecosystems (Cloud, Hybrid, Identity, Supply Chain)

Finally, the digital infrastructure of companies — especially large tech firms — is becoming far more complex. Multiple clouds, edge compute, containers, serverless, hybrid legacy systems, third‑party integrations, APIs, IoT/OT all make the environment harder to secure. Complexity drives cost.

• Gartner’s forecast for 2024 cites that the combination of continuous adoption of cloud, a continuous hybrid workforce and rapid emergence/use of generative AI force SRM leaders to increase spending.

• A vendor blog from Palo Alto speaks of “security debt” — decades of accumulated fragmented point‑solutions, inconsistent policies across clouds, multiple consoles — and says moving to unified security is akin to “paying down” this debt.
  The upshot: when the architecture is simple (on‑premises, single datacenter) the attack surface is manageable; when it’s multi‑cloud, multi‑device, hybrid, you need more tools, more personnel, more analytics — hence more spend.

4. How Major Tech Firms Are Adapting Their Business Models

As the demand for cybersecurity has ramped up, major technology firms — whether native security vendors or “big tech” players with security arms — are evolving their business models. I’ll highlight three firms: Microsoft Corporation, Palo Alto Networks, and CrowdStrike Holdings, Inc..

Microsoft

Although Microsoft is primarily known as a software/operating systems/cloud provider, cybersecurity is integral to its offerings (Azure, Microsoft 365, identity, cloud services). With more workloads going into Azure/AWS/GCP and more endpoints using Windows and Office, Microsoft has an embedded security interest. While I found fewer specific public metrics in my search for this article about Microsoft’s spend on cybersecurity services, some relevant trends:

• Microsoft’s own cloud and identity offerings require security controls; as their enterprise customers invest more in security, Microsoft benefits via integrated offerings and vendor‑ecosystem leverage.

• For instance, Palo Alto’s case study shows co‑selling with Microsoft: “Co‑selling with Microsoft allows us to solve two of the CIO’s biggest challenges: the migration of public cloud and cybersecurity.”
  Thus Microsoft is not simply a provider of cloud/OS but is increasingly functioning as a platform where security needs are embedded and monetized. The model shifts from separate security vendor to integrated ecosystem supplier with security as a “feature” of broader IT spend.

Palo Alto Networks

Palo Alto is a clearer native cybersecurity vendor and thus offers strong insight into how business models are adapting to the surge. Key observations:

• The firm is shifting from “firewall / network security appliance” to a broader “platform” orientation covering network + cloud + AI + identity. (Their own description: “From a network security leader… today it has the most comprehensive cybersecurity platform across network security, cloud security and security operations.”)

• They emphasize consolidation: reducing “security debt” via unified platforms, which helps licensing, deployment, operations efficiency.

• Strategic acquisitions: for example, the announced ~US$25 billion deal to acquire identity‑security vendor CyberArk Software Ltd. signals that Palo Alto is doubling down on identity and privileged access as part of its platform.

• They are also targeting cloud security: their Unit 42 research found big jumps in cloud alerts (see earlier) and they are positioning themselves accordingly.
  In effect, Palo Alto is aligning its business model to the rising spending trends by: (1) broadening scope beyond basic network/firewall, (2) moving into cloud & identity, (3) offering platforms and consolidation (to appeal to enterprise buyers who want fewer vendors), (4) positioning for the AI‑driven detection/response era.

CrowdStrike

CrowdStrike provides a somewhat different angle: historically founded as a cloud‑native endpoint protection platform, they now emphasize AI, threat intelligence, cloud workloads, identity, data. Insights:

• Their Falcon platform (cloud‑native) promises to “collect data once and use it many times” and covers endpoints, cloud workloads, identity and data.

• In recent commentary, analysts say CrowdStrike’s unified platform and AI‑driven threat defense underpin its premium valuation via customer consolidation and recurring revenue growth.

• They are moving from product to “platformization” — consolidation of multiple capabilities via a single vendor relationship (endpoint, identity, cloud, detection) and employing AI/ML to automate more.
  What this means: CrowdStrike’s business model aligns with the growth drivers (endpoint, cloud, identity, AI) and focuses on sticky subscription/ARR business, which adapts well to rising cybersecurity spending.

Summary of Vendor Business‑model Adaptation

In aggregate, major tech/security vendors are adapting by:

• Moving from discrete point‑solutions (firewalls, AV) to full platforms (XDR, unified endpoint + identity + cloud)

• Emphasizing cloud‑native delivery, SaaS/subscriptions, recurring revenue rather than on‑prem licenses

• Embracing AI/automation to reduce cost of operations and appeal to buyers needing to scale defenses

• Positioning around consolidation: enterprises under budget and talent strain prefer fewer vendors and unified management

• Recognizing adjacent growth markets: identity, cloud workloads, hybrid/edge, zero trust are increasingly critical

5. Investor and Government/Policy Dynamics Fueling Growth

While corporate IT budgets and vendor models are central, two additional dynamics are driving the surge in cybersecurity spend: investor confidence and government/regulatory policy.

Investor Confidence and Capital Markets

Cybersecurity as an investment theme has gained traction. Several signals point to this:

• Reuters reported that vendors such as SentinelOne, Inc. raised annual revenue forecasts on strong demand. For example, on 28 August 2025, SentinelOne raised its forecast citing “growing cybersecurity demand”.

• Another Reuters piece: Netskope Inc. (very much a cloud‑security vendor) recorded a 30.7 % jump in revenue in H1 2026 (according to their IPO filing) while losses narrowed.

• Media commentary: Cybersecurity stocks are viewed by some analysts as a “defensive growth” theme and are being pitched as long‑term secular winners even amid macro‑uncertainty.
  Thus, investor sentiment is favorable, venture and growth funding continues in cybersecurity, and public market valuations remain strong — all of which supports vendor expansion, hiring, R&D and by extension, customer willingness to spend.

Government Policy, Regulation and Public‑Sector Spend

Governments around the world are increasingly involved in cybersecurity: setting rules, mandating reporting of cyber incidents, regulating supply‑chain and infrastructure, increasing public‑sector cyber budgets. Some relevant points:

• As noted earlier, Gartner pointed out that by 2025, 75 % of the world’s population will have its personal data covered by modern privacy regulations.

• Public‑sector deals matter. For example, Reuters reported that Okta (identity/SSO vendor) said 5 of its top 10 deals in a quarter were public‑sector (including one large Department of Defense deal) and raised its forecast accordingly.

• Government cybersecurity agencies increasingly require contractors and vendors to meet higher security standards, pushing enterprises to invest more in vendor solutions.

• National‑security concerns, cyber‑espionage, critical infrastructure attacks (power grids, telecoms, utilities) are elevating cybersecurity from an IT “nice to have” to a board‑level strategic risk.
  The upshot: regulatory, policy and public‑sector dynamics both raise the cost of failing to invest (via fines, reputational risk, regulatory scrutiny) and raise the impetus for investment (via mandates, incentives, public‑private partnerships).

6. Putting It All Together: Tech Sector Implications

Given the above, let’s apply the insights specifically to the tech sector — why tech firms (cloud providers, SaaS vendors, hardware companies, enterprise software companies) are driving and also being driven by the surge in cybersecurity spend.

Why Tech Firms Are Spending More on Cybersecurity

• Many tech companies are themselves high‑visibility targets: the “crown jewels” of IP, data, platforms make them attractive to nation‑state and criminal adversaries.

• The shift to cloud‑native architectures, containerization, SaaS, multi‑tenant platforms increases complexity (as described earlier) — so the internal security (and vendor security) demands go up.

• Tech firms increasingly act as both vendors and customers of cybersecurity. If you’re a cloud‑provider you must defend your own infrastructure and offer secure services to customers — investment becomes both cost of business and competitive differentiator.

• Subscription‑based SaaS models raise the “blast radius” of a breach: a compromised SaaS vendor may affect many customers, elevating risk and thus budget.

• Talent and operations constraints: tech firms need to secure global operations, distributed workforce, developer/dev‑ops pipelines, supply‑chain (including open‑source vulnerabilities) — all of which drive spending.

Why Tech Firms Benefit from Rising Cybersecurity Spend

• Many tech firms are vendors of cybersecurity themselves — so rising spend means higher demand, faster growth, more innovation.

• A rising threat environment creates opportunities for new product lines: cloud security, identity security, detection & response, managed services, platform consolidation.

• As organizations want fewer vendors and unified platforms (see vendor business‑model trends), tech/security vendors with strong portfolios can capture higher share, upsell, cross‑sell.

• Investor interest in cybersecurity translates into easier access to funding, higher valuations, M&A activity, enabling faster growth and innovation.

Risks & Considerations for Tech Firms

• While overall spend is rising, much of it is shifting: from on‑premises / hardware to cloud, SaaS, managed services. Vendors that fail to adapt may lose share.

• With many vendors chasing the same growth, competition is intensifying; thus margins may compress, or sales cycles may lengthen (especially if macro economy slows).

• Talent shortage: the gap in skilled cybersecurity professionals remains significant, meaning organizations may struggle to deploy or operate solutions effectively — this puts pressure on vendors to deliver automation and services.

• Vendor consolidation: as vendors bundle and platform‑ize, smaller/point‑solution vendors may struggle; tech firms need to continue evolving or risk being subsumed.

• Finally, the cost of failure (security incident, breach, regulatory fine) remains high — stock price, reputation and customer trust are vulnerable. This should motivate, but also caution, persistence of investment.

7. Looking Ahead: What To Watch

What should tech‑sector executives, investors and strategists look out for in the coming years?

Continued double‑digit growth, but watch for macro headwinds

While forecasts show ~11‑15 %+ growth in cyber spend globally, broader economic pressures (recession risk, budget constraints, SaaS vendor attrition) may moderate growth or extend sales cycles. Nonetheless, many organizations view cybersecurity as non‑discretionary, which helps cushion the growth.
For example, the 2025 forecast of US$212 billion (Gartner) assumes the tailwinds remain strong.
The Fortune Business Insights projection (~US$562 billion by 2032) suggests a long runway for growth.

Platform consolidation and vendor consolidation

The shift to unified security platforms (XDR, unified endpoint + cloud + identity) is a key trend. Vendors who offer broad coverage across attack surfaces, cloud workloads, identity, detection/response and automation may capture more share. This also drives M&A activity.
For example: Palo Alto’s push into identity via CyberArk acquisition.
Investor commentary: “The hot buzzword for cybersecurity stocks isn’t AI anymore, it’s ‘platform’.”

Cloud, AI, identity and future architectures

Cloud and hybrid work remain dominant. Identity and access become critical control points. AI (both defensive and offensive) is increasingly pivotal. Vendors that integrate these capabilities will have a competitive edge.
For example, Palo Alto’s Unit 42 report showing explosion of cloud alerts (and their positioning accordingly).
Also, CrowdStrike emphasizing AI‑driven threat detection and unified cloud/endpoint/identity coverage.

Cyber‑risk becomes enterprise‑risk

Cybersecurity is not just an IT problem anymore — it’s a board‑level, enterprise‑risk, regulatory risk, business‑continuity problem. This framing will push more budget into security, and also demand more advanced analytics, governance, reporting and board visibility. Vendors that help organizations measure risk, show ROI, embed security into business processes will win.
Palo Alto’s “new economics” commentary emphasizes this shift: “security accelerates the business” not just “protects it”.

Government, regulation and public sector demand

Governments will continue to increase cyber‑defense budgets, demand secure critical infrastructure, require vendors to meet certain standards, and push regulation around data, privacy, incident‑reporting. All of this will sustain spend. Tech firms that serve public sector or critical infrastructure will benefit. The public‑sector deals mentioned earlier (Okta, etc.) hint at this trend.

Talent & operational constraints

One risk: organizations often struggle to operationalize security investments (lack of skilled staff, fragmented tools, complexity). This means that the ROI on spend can vary, and vendors that provide automation, managed services (MDR, MSSP) will be more attractive. The services portion of cybersecurity spend (already ~40 %+ of total) suggests this dynamic.

8. Conclusion

In summary: cybersecurity spend is surging, and for very good reason. The global market is now in the order of US$200 billion annually and forecast to grow strongly for years. Key categories such as cloud security, endpoint protection, AI‑driven detection/response and managed security services are driving that growth. The forces behind the surge are multifaceted: escalating cyber threats, remote/hybrid working and distributed perimeters, regulatory and compliance pressures, and the increasing complexity of digital ecosystems. Tech sector firms are not only buyers of this spend but also major vendors — and their business models are evolving accordingly, toward end‑to‑end platforms, recurring SaaS models, automation/AI and consolidation of capabilities.

From an investment and strategic‑planning perspective: technology companies that embrace strong built‑in security, clean integration of cloud + identity + endpoint, partner effectively, and position themselves as risk‑reduction enablers (not simply point‑solutions) will ride the growth wave. Similarly, enterprises within the tech sector need to treat cybersecurity not simply as a cost line, but as a business‑enabler, a differentiator, and a board‑level strategic investment.

For technology firms operating in highly competitive and digital‑rich markets, this surge in cybersecurity investment is not just a cost of doing business—it’s a strategic imperative. As these companies scale globally, adopt complex cloud infrastructures, support distributed workforces and partner with large enterprise customers, the consequences of a security failure are elevated. Investing proactively in unified platforms, identity‑centric security and AI‑driven threat detection becomes a differentiator—not just to mitigate risk, but to build trust, enable new business models and gain market share.