CRWD, PANW, OKTA Stocks Have Doubled This Year — Here’s What’s Driving The Cybersecurity Rally

According to analysts at IO Fund, the first major driver behind the rally is the growing use of AI in cyberattacks and the expanding attack surface companies now have to defend.

• CrowdStrike’s 2026 Global Threat Report, cited by IO Fund, found that AI-enabled adversaries increased their operations by 89% in 2025.
• IBM’s research shows that one in four security breaches is now AI-enabled, with those incidents costing roughly $6 million on average, versus a $4.99 million global average.
• The other major trend identified by IO Fund is happening inside corporate security departments, which is, customers are increasingly consolidating their spending across broader cybersecurity platforms.

Cybersecurity stocks have emerged as some of the biggest winners of the artificial intelligence boom in 2026, with investors betting that the same technology transforming businesses is also creating a new wave of security threats.

Okta Inc. (OKTA), CrowdStrike Holdings Inc. (CRWD) and Palo Alto Networks Inc. (PLTR) are up 141%, 114% and 99%, respectively, through Oct. 30. The First Trust NASDAQ Cybersecurity ETF (CIBR) is also up nearly 40%, far ahead of the Nasdaq 100’s roughly 11% gain.

CrowdStrike shares closed more than 4% lower in Friday’s regular trading session, Palo Alto Networks shares fell nearly 4%, while Okta shares fell over 6%.

AI Is Creating A Bigger Cybersecurity Problem, Say Analysts

According to IO Fund, the first major driver behind the rally is the growing use of AI in cyberattacks and the expanding attack surface companies now have to defend.

CrowdStrike’s 2026 Global Threat Report, cited by IO Fund, found that AI-enabled adversaries increased their operations by 89% in 2025. IBM’s research shows that one in four security breaches is now AI-enabled, with those incidents costing roughly $6 million on average, versus a $4.99 million global average.

The threat is also pushing companies to increase spending. IO Fund cited IBM data showing that 85% of organizations plan to raise security spending after learning about the cyber capabilities of frontier AI models, up from 64% in 2025.

The shift is becoming particularly important as companies deploy increasingly autonomous AI agents that can write code, access systems and perform tasks with limited human intervention.

The firm also pointed to OpenAI CEO Sam Altman’s warning about the difficulty of securing increasingly capable AI systems: “I no longer think we’re gonna be able to just patch all the bugs,” Altman said during a speech at Stanford Graduate School of Business last month.

IO Fund said Gartner expects spending on platforms designed to secure AI systems to climb from about $3 billion in 2026 to $7.7 billion in 2028, suggesting the emerging threat could translate into a substantial new security spending cycle.

Enterprises Are Spending More And Consolidating

The other major trend identified by IO Fund is happening inside corporate security departments, which is, customers are increasingly consolidating their spending across broader cybersecurity platforms rather than buying a growing number of point solutions.

CrowdStrike’s results offer one indication of the trend, the firm said, adding that CrowdStrike’s annual recurring revenue from its Falcon Flex offering topped $2.2 billion, up 101% year over year, while 51% of its subscription customers now use six or more modules.

The firm added that Palo Alto Networks is seeing a similar shift. IO Fund noted that the company added roughly 220 platformization deals in its fiscal fourth quarter (Q4), more than double the pace from two years earlier. Net revenue retention among platformized customers exceeded 120%, while Prisma AIRS, its AI security platform, surpassed $100 million in annual recurring revenue.

IO Fund added that AI may not simply create demand for a new category of security products, but it could also accelerate spending with vendors that can secure multiple parts of an enterprise’s infrastructure.

IO Fund estimates CrowdStrike’s revenue could grow at a 23% compound annual rate through fiscal 2029, more than twice Gartner’s projected 11% annual growth for the overall cybersecurity market. Okta and Tenable are expected to grow at roughly 10% and 7%, respectively.

The Global X Artificial Intelligence & Technology ETF (AIQ) fell about 4.45% on Friday, while the iShares U.S. Technology ETF (IYW) fell nearly 4.33%.

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