As I explained yesterday, cybercrime with AI isn't going away... According to the Federal Trade Commission, impostors were the No. 1 scam in the U.S. last year. In total, victims reported losing more than $3 billion.

A 'Silver Lining' to AI in Cybercrime By Joe Austin, senior analyst, Chaikin Analytics As I explained yesterday, cybercrime with AI isn't going away... According to the Federal Trade Commission, impostors were the No. 1 scam in the U.S. last year. In total, victims reported losing more than $3 billion. Globally, the cost of cybercrime is estimated to be $9.5 trillion for 2024. And this year, it's expected to reach $10.5 trillion.  With numbers like that, if it was a standalone country, cybercrime would be the third-largest economy in the world – behind the U.S. and China. And the AI-based fake voices I discussed yesterday are only part of the problem... AI Makes Cybercrime Easier Than Ever Cyberattacks are an even bigger business. That's where criminals try to breach a company or organization's information systems. Just last year, oilfield-services company Halliburton (HAL) spent $35 million related to a cyberattack in August. And insurance giant UnitedHealth (UNH) said last year that the projected costs from a massive cyberattack against one of its business units would be more than $2.3 billion. In the old days, cyberattacks were a "bespoke" kind of job. Criminals needed a certain level of expertise to know what systems to go after... and how best to crack them. But today, AI gives even novice criminals all the tools they need... They don't need to know where to go. They can attack every point in a company's infrastructure at once. With AI, criminals can also automate the entire process. And they can keep trying until they succeed... or until they decide to move on to a more attractive target. Phishing is another huge market. That's where criminals use fake e-mails to steal sensitive information. Think of things like passwords or credit-card numbers. In the old days, phishing on a big scale was difficult. Criminals had a harder time producing e-mails in ways that made them look real. But with AI, criminals can create highly authentic and personalized content. That makes the attack much harder to detect. Data-security company Kaspersky identified nearly 900 million phishing attempts blocked by its software in 2024. That represented a 26% increase from the previous year's figure. Kaspersky also found that every second e-mail in corporate inboxes was spam. Those included more than 125 million e-mails with malicious attachments. And because of AI, falling for these attacks is getting easier... In 2023, security awareness and training provider SoSafe conducted a study using AI-generated simulated phishing e-mails. It found that targets opened 78% of AI-generated phishing e-mails. And 21% of those people clicked on malicious content within. The study also showed that 65% of those people revealed personal information on websites linked via AI-generated e-mails. So it's no surprise that companies are spending big money to fight all this... 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Taking Advantage of a Booming Market for Cybersecurity Spending on cybersecurity – including hardware, software, and services – came in at about $215 billion last year. By 2035, this market is expected to more than triple to $697 billion.  That's a compound annual growth rate of 11.3%. So when it comes to taking advantage of this trend, one easy way is to look at exchange-traded funds ("ETFs") focused on cybersecurity... You might have heard of the First Trust Nasdaq Cybersecurity Fund (CIBR) and the Amplify Cybersecurity Fund (HACK). They're big ETFs in the space – with assets of more than $7 billion and nearly $2 billion, respectively. Looking at these funds in the Power Gauge, both currently earn a "neutral+" rating.  Keep in mind that our system switches to a "neutral+" rating when a "bullish" or better stock pulls back below its long-term trend line. That means our system isn't ready to give it a "bullish" rating... but it's close. Of course, you can also dig deeper with individual stocks... As you would expect, large tech companies like Microsoft (MSFT) and Cisco Systems (CSCO) integrate security in their product offerings. But other companies are obviously more focused on cybersecurity specifically. And these types of "pure plays" are generally more interesting. For the more well-known names, you might have heard of companies like Cloudflare (NET) and Fortinet (FTNT). In the Power Gauge, both of these stocks also hold "neutral+" ratings. AI Itself Is a 'Silver Lining' With Cybercrime Despite the AI surge in cybercrime, the technology can be used against itself in fighting this type of activity... Risk-advisory company Kroll recently conducted a study of corporate executives across the globe. It showed that 57% of respondents thought that AI would help with financial crime compliance programs. And more than half of the respondents were investing in both AI and non-AI tech to address these risks. But that's not all... More than 70% of survey respondents expected the risk of financial crimes to increase in 2025. And only 23% of them rated their current compliance programs as "very effective" in fighting it. So there's still lots of work to do. Companies will have to keep spending piles of money on cybersecurity. Folks, the main point is clear... When it comes to cybersecurity, all of this is a big trend to keep an eye on in the long run. Good investing, Joe Austin Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 -2.49% 0 23 7 S&P 500 -2.38% 28 321 155 Nasdaq -2.47% 5 64 31 Small Caps -2.01% 124 1235 534 Bonds -1.75% — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are mixed. *  *  *  * Sector Tracker Sector movement over the last 5 days Energy +0.25% Real Estate -0.43% Consumer Staples -0.77% Utilities -2.27% Materials -2.39% Financial -3.18% Industrials -3.54% Communication -4.03% Health Care -4.31% Consumer Discretionary -5.16% Information Technology -6.14% *  *  *  * Industry Focus Pharmaceuticals Services 0 23 22 Over the past 6 months, the Pharmaceuticals subsector (XPH) has underperformed the S&P 500 by -8.80%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #18 of 21 subsectors. Indicative Stocks AXSM Axsome Therapeutics, ZVRA Zevra Therapeutics, ELAN Elanco Animal Health *  *  *  * Top Movers Gainers DFS +3.56% DG +2.73% FIS +2.4% MCHP +2.26% ULTA +2.21% Losers UHS -10.15% BX -7.8% VST -7.71% HUM -7.02% CEG -6.81% *  *  *  * Earnings Report Earnings Surprises WRB W. R. Berkley Corporation Q1 $1.01 Beat by $0.02 CALX Calix, Inc. 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