The escalating conflict across the Middle East intensified dramatically on Feb. 28, 2026, with the launch of the United States–Israel joint offensive, Operation Epic Fury, and has rapidly evolved into a trans-regional war in recent weeks. Beyond kinetic strikes on military and nuclear infrastructure, a parallel and relentless battle rages in the digital domain.
As physical supply chains are disrupted and communication networks are targeted, the conflict has underscored a modern reality — war is no longer fought with missiles alone. While defense contractors see a surge in orders for hardware, this “new era of warfare” is driving unprecedented demand for the software shield.
Consequently, companies building the digital ramparts, and by extension, the cybersecurity exchange-traded funds (ETFs) that hold them, are positioned for significant strategic growth amid the heightened threat landscape.
Before diving into the specifics of these ETFs, it is important to examine how this warfare could benefit cybersecurity firms and the ETFs that hold them, as digital resilience has become a mandatory pillar of national survival rather than an optional weapon.
There is a direct, positive correlation between modern geopolitical conflict and the valuation of cybersecurity companies. In the modern warfare landscape, cyberattacks serve as the “first mover” in any engagement.
After President Donald Trump confirmed that the U.S. military had begun major operations in Iran, it was reported that the country plunged into a near-total internet blackout, with nationwide connectivity dropping to roughly 4% of normal levels (as per a report by Forbes). This implies that a cyber operation paralyzed nearly 96% of Iran’s internet traffic and compromised its command-and-control systems.
Cybersecurity and threat intelligence firms like those mentioned below — whose technologies help secure government networks, critical infrastructure and financial systems in the United States and Israel — are likely to benefit from the escalating conflict in the Middle East.
These key beneficiaries include:
• Palo Alto Networks PANW: Its Unit 42 threat intelligence team is currently at the forefront of identifying Iranian “cyber proxies” targeting U.S. and Israeli government networks.
• CrowdStrike CRWD: Its AI-driven endpoint protection is critical for the U.S. Department of Defense to thwart state-sponsored “wiper” malware and ransomware.