Last year, Warren Buffett was asked about what is arguably the defining technology of our era – artificial intelligence (AI). While recognizing its potential for good, he also warned against the darker side of artificial intelligence.

Indeed, he said that technology could lead to a huge boost in fraud. This fear was heightened when the billionaire investor saw a imitation video of himself that impeccably mimicked his voice and mannerisms.

In Buffett’s words: “If I were interested in investing in fraud, it would be an all-time growing industry.“

Huge future growth expected

Of course, the Oracle of Omaha is not suggesting that we invest in AI-based scams. But that’s the point. If this area continues to grow exponentially, then surely the anti-fraud industry – cybersecurity – is its mirror image.

In other words, where there is a surge in AI-based fraud, there will also be a booming market for AI technologies that enhance cybersecurity measures.

And we see this in various industry forecasts. For example, Grand View Research reports that the global AI cybersecurity market will reach $93.75 billion by 2030, up from $25.35 billion in 2024.

That’s a solid compound annual growth rate of 24.4%!

Two growing stocks

I have two stocks in my portfolio that I believe could benefit from future growth. These are Crowd blow AND Cloudflare.

CrowdStrike sells AI-powered software that detects and stops real-time attacks on laptops, servers and cloud systems. As threats become more intricate in the future, demand for tools is expected to continue to grow.

Meanwhile, Cloudflare protects the Internet itself, protecting websites, applications and networks from intrusions and failures. More than 20% of the web already runs on Cloudflare, which recently implemented a “pay-per-crawl” model in which websites can charge AI companies for access to their content.

However, both companies’ shares are very high-priced after rising significantly over the past year. If upcoming quarterly results disappoint – in terms of revenue or profit growth (or both), then they could decline sharply.

Let’s just say I doubt value seeker Warren Buffett will be buying any of these any time soon!

Basket strategy

For investors looking to take advantage of the explosive growth potential of cybersecurity, I think it may be best to consider a basket approach. This means that instead of choosing one or two stocks, an option can be iShares Digital Security UCITS ETF (LSE:LOCK).

This exchange-traded fund (ETF) offers diversified exposure to 110 companies in the cybersecurity/digital security ecosystem, including CrowdStrike and Cloudflare. The three largest farms are Respect (up 119% since the beginning of the year!), Arista networksand database company MongoDB.

Not only does this reduce individual company risk, but the ETF’s total expense ratio is just 0.40%, which is quite modest for a global thematic fund.

The results are very good – an boost of 87% in five years.

Of course, an ETF is not perfect (no investment is). One risk I see here is that the fund’s overall price-to-earnings ratio is still quite high at just over 30. So the product could underperform for a while if tech stocks sell aggressively, which happens periodically.

However, over the long term, I would be stunned if this ETF didn’t perform well. Businesses and organizations of all sizes are forced to strengthen their cybersecurity.

I expect that as AI threats boost, the companies providing solutions will become larger.