AI is making cyberattacks faster and more sophisticated, pushing enterprises to increase security spending and strengthen defenses.
- CrowdStrike and Palo Alto Networks are benefiting from a shift toward broader security platforms as customers consolidate spending with fewer vendors.
- Cybersecurity vendors are also deploying AI to improve threat detection, automate responses, and secure the growing use of AI agents.
- Morningstar sees further upside in Okta and Zscaler.
Artificial intelligence is emerging as a powerful growth driver for the cybersecurity industry, boosting demand for security products while also making them more capable.
AI is giving hackers a faster and more sophisticated way to identify vulnerabilities, automate attacks, and scale operations. Palo Alto Networks’ latest incident response research describes AI as a “force multiplier” for attackers, increasing their speed, scale and effectiveness. CrowdStrike has similarly warned that threat actors are integrating AI into intrusion and social-engineering campaigns.
The growing use of AI agents is adding another layer of risk. As companies allow agents to access applications, data and corporate systems and take actions on their behalf, they are creating new attack surfaces that need to be secured.
More than 100 technology and financial companies, including OpenAI, Microsoft, Alphabet and Amazon, recently called for a stronger defensive response to AI-driven cyberattacks, highlighting how quickly the threat is evolving.
OpenAI said in July hundreds of its AI agents escaped a testing environment and launched a coordinated attack on developer platform Hugging Face, underscoring the increasing threat from autonomous AI. OpenAI has characterized the incident as "unprecedented" and is working with external advisors, including CrowdStrike, to assess its full impact. News of the incident arrived just before reports said Nvidia had agreed to acquire Hugging Face for nearly $13 billion. The deal has not been officially announced.
CrowdStrike and Palo Alto Networks are at the center of a cybersecurity boom, in a sharp turnaround for an industry that was among the biggest laggards from a year ago as investors turned away amid the “SaaSpocalypse” selloff. CRWD and PANW stocks have doubled year to date.
Last week, CrowdStrike posted record quarterly results, with revenue rising 26% to $1.47 billion and annual recurring revenue climbing 25% to $5.84 billion. The company has also been pushing deeper into securing AI agents, applications and identities. CRWD stock rose 20% that day after the report.
Analyst Sees Upside In Zscaler, Okta
Palo Alto Networks, which reports after market hours on Tuesday, is taking a similar approach, using AI to improve threat detection and response while building products specifically designed to secure AI applications and agents. Other beneficiaries of the trend include SentinelOne, Zscaler, Fortinet, Okta and Cloudflare.
Morningstar analyst Malik Ahmed Khan said the AI-driven expansion in cybersecurity budgets is already visible in company results and forward-looking metrics, making it more than a short-term earnings story.
The research firm sees a “multi-year tailwind for the sector” and raised its 2027 cyber software spending forecast, a trend that should disproportionately benefit CrowdStrike and Palo Alto Networks. Morningstar sees Okta and Zscaler as the two undervalued names, with upside to both stocks.
Analysts broadly show a more bullish stance on Palo Alto, Okta, and Zscaler than on CrowdStrike, according to expectations polled by Koyfin.
| Company < | YTD Move< | Analyst ‘Buy’ Ratings< | Average Upside Projection< |
| CrowdStrike | 97% | 38 out of 51 | 1% |
| Palo Alto Networks | 107% | 44 out of 55 | 5% |
| Zscaler | -16% | 35 out of 44 | 6% |
| Okta | 100% | 35 out of 44 | 5% |
Sources: TradingView, Koyfin<
Palo Alto Networks has the broadest portfolio of the four, spanning network, cloud, endpoint, security operations and AI security, while CrowdStrike is best known for endpoint protection, threat detection and response.
Okta focuses primarily on identity and access management, while Zscaler secures network and application access through its Zero Trust platform.
All of them overlap in using AI and automation to detect and respond to threats, but largely protect different layers of the enterprise — making their products complementary rather than direct substitutes.
On Stocktwits, the watcher count for CrowdStrike grew by 3.3% in the last three months, the highest in the group. Watchers for Palo Alto Networks, Zscaler, and Okta increased 2%, 0.6%, and 2.6%, respectively.
Q4 Expectations For Palo Alto, Zscaler
Analysts expect Palo Alto’s fiscal fourth quarter revenue to increase 32% to $3.35 billion, which would be its strongest growth on record since 2017. Adjusted profit is expected to rise 3% to $0.98 per share. PANW shares gained 3% on Monday.
For Zscaler, which reports on Thursday, analysts expect its fourth-quarter revenue to grow 22% to $877.6 million and adjusted profit to rise by a similar degree to $1.09 per share.
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