Cybersecurity ETF Hits April 2025 Low After Major Stocks Drop up to 17%
Since Anthropic’s Feb. 20 launch of Claude Code Security, the First Trust Nasdaq Cybersecurity ETF has slid to its lowest level since April 2025 and is down for seven consecutive weeks. Major constituents fell up to 17% at CrowdStrike, 13% at Okta and 11% at Zscaler over four days.
1. AI Product Launch Sparks Sell-Off
On Feb. 20, Anthropic launched Claude Code Security, an automated AI tool for pre-production vulnerability scanning. Shares of cybersecurity providers plunged within minutes as markets assessed AI’s potential to undercut traditional security services.
2. ETF Slides to Multi-Month Lows
The First Trust Nasdaq Cybersecurity ETF slid to its lowest level since April 2025 and has declined for seven consecutive weeks, the longest losing streak since 2015. The prolonged slide reflects growing investor concerns over margin compression and AI-driven disruption in the sector.
3. Major Constituents' Stock Declines
CrowdStrike plunged nearly 17% over four days, marking its worst four-day stretch since 2022, while Okta and Zscaler fell 13% and 11%, respectively. Palo Alto Networks and SentinelOne reported declines of 8.6% and 6%, intensifying pressure on the ETF’s performance.
4. Cybersecurity Platforms Retain Edge
Bank of America analyst Madeline Brooks argues AI code scanning will augment existing platforms rather than replace them, citing the lack of runtime visibility and proprietary telemetry in standalone tools. Major cybersecurity vendors continue to leverage real-time sensors and integrated data pipelines, preserving their structural advantages and deep workflow integration.