Tech investors should watch out for a surge in cybersecurity attacks from Russia over the West's sanctions, Wedbush says

Tech investors should focus on cybersecurity providers, as Russian cyber-warfare could change the game for US enterprises, Wedbush said.

• Watch for a surge in cyberwarfare from Russia as the West imposes sanctions over Ukraine, Wedbush said.
• Well-positioned vendors in the cybersecurity sector should be a focus for tech investors, the analysts said Tuesday.
• "It's a matter of when, not if, this increased cyber warfare activity begins over the coming weeks," they added.

Tech investors should watch out for a surge in cyber warfare from Russia as the West imposes sanctions over its escalating crisis with Ukraine, Wedbush has warned.

"With the Ukraine conflict now front and center and poised to widen, we expect a surge of cybersecurity attacks from Russia state-sponsored organizations that could change the game for US/European enterprises and governments over the coming months," Wedbush analysts Dan Ives and John Katsingris said in note Tuesday.

Western powers brought in sanctions after Vladimir Putin on Monday recognized two breakaway regions in Ukraine as independent and ordered Russian troops into the country. US President Joe Biden described the moves as the beginning of a Russian invasion of Ukraine.

Biden on Tuesday imposed US sanctions on a pair of Russian banks, some of the country's political elites, and Russia's sovereign debt.

The UK brought in sanctions against five Russian banks and three wealthy individuals. The European Union is close to announcing its own measures, which include restricting the Russian government's ability to raise money on EU financial markets, the Guardian reported.

The market assessed these moves as relatively measured, as they avoided sanctioning Putin personally and didn't penalize the most significant Russian banks. 

Based on recent conversations with enterprises and security officers, Wedbush said there are growing chances of cyber attacks that could leave sensitive data vulnerable. It also expects companies to invest in protection against persistent cyberthreats.

"With a significantly elevated level of cyberattacks now appearing on the horizon, we believe added growth tailwinds for the cybersecurity sector and well-positioned vendors should be a focus sector for tech investors during this market turmoil," the analysts wrote.

They suggested organizations might not be able to block every attack, but will put up defenses to protect their most valuable asset: data.

Chances of massive cyberwarfare "would certainly catalyze an increase in spending around preventing sophisticated Russian-based cyberattacks going after datacenters, networks, vulnerability points, and other highly sensitive data," they added.

Economic sanctions against Russia are expected to affect energy supplies, at a time of already high tensions in oil and gas prices. Market analysts say that while diplomats remain at work, it is undeniable that tensions over Ukraine represent an added element of volatility and downside risk for the economy and financial markets.

"With many high profile cyber security attacks coming from Russia over the past few years, it's a matter of when, not if, this increased cyber warfare activity begins over the coming weeks; with the Ukraine invasion a 'powder keg situation' with broader cyberwar implications felt around the globe."

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