CEO at Palo Alto Networks Inc., Nikesh Arora attends the 9th edition of the VivaTech trade show at the Parc des Expositions de la Porte de Versailles on June 11, 2025, in Paris.
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The Anthropic Mythos model has provided a much-needed way of life for cyber security companies in the age of artificial intelligence.
However, this week’s cybersecurity earnings provided a harsh reminder that even with the wind, sometimes good isn’t enough for cybersecurity stocks. CrowdStrike again Palo Alto Networks lost 8% and 3%, respectively.
“It’s possible that people will get a little bit of skating,” said Joseph Gallo, a software analyst at Jefferies. “They both gave directions to accelerate, but at the end of the day … many of these AI benefits take time, and this is a multi-year process.”
Cybersecurity stocks sold off at the start of the year amid concerns that new AI tools, capable of building applications at lightning speed, would upend their business models and, by extension, the entire software company.
The launch of Mythos, a model deemed too powerful to release because it can be easily used to exploit software vulnerabilities, renewed enthusiasm for the industry, sending shares of CrowdStrike and Palo Alto Networks soaring more than 70% each between April and late May.
Both companies were early partners in Anthropic’s exclusive Project Glasswing pilot program, an AI lab that expanded to 150 additional partners this week, including. Rubrik again It is usable.
This quarter’s earnings marked the first major test of that Mythos-driven rally, and positive results and bullish AI comments from both cyber giants weren’t enough for investors looking for immediate signs of AI’s fall.
Palo Alto Networks and Crowdstrike stock chart year to date.
The idea that it’s good not to be enough is nothing new on Wall Street. Even AI dear Nvidia He succumbed to this condition after failing to meet the high standards.
Investors are moving toward earnings with the same vision and hope that AI tailwinds will help Internet firms generate revenue out of the box.
Wall Street got a lot of cheer from those prints, but investors may be ignoring the idea that these headwinds could take months to pay off, Gallo said.
Typical business sales cycles last nine to 12 months, which means many signs of upside from AI may not emerge until the 2027 calendar year. The fourth quarter of the calendar year, Gallo added, is the strongest shopping period for customers as businesses reset their budgets for the new year.
If a business “just launched an AI product in the last quarter or two, I don’t think it’s fair to expect this big of a rise.”
CEOs of the world’s largest cyber companies made that point clear.
Palo Alto CEO Nikesh Arora told analysts this week that demand is off the charts at the time of Mythos and that more than 1,200 companies have reached out to the cybersecurity company to discuss AI strategy. So far, the company has held 800 meetings in the past six weeks, close to 100 of which Arora said he conducted.
Although demand patterns show positive signs, he said analysts should not expect “wind” immediately in the next quarter as businesses buy from cyber, but he expects “solid growth.”
“I wouldn’t go ahead on my skis and start throwing away the kitchen sink and numbers of cybersecurity companies, because there is still a process, a machine, a cycle that people buy, and there is execution and shipping,” he said.
CrowdStrike CEO George Kurtz echoed the same sentiment.
The company has raised its new 2027 revenue growth compounded annually on AI tailwinds.
Kurtz told analysts on an earnings call that AI detection and response, or AIDR, is a major new segment that could disrupt the security market but is still in the “early innings.” The company’s pipeline for the second half already exceeds $50 million, he added.
“When it becomes the norm and all companies accept it for all their employees and their work, I think you will only see an increase in additional opportunities,” he said.
