Palo Alto Networks and CrowdStrike signs.
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It was a good quarter for technology stocks and cybersecurity leaders. palo alto networks and cloud strike Both took part in the historic rally.
CrowdStrike and Palo Alto rose 95% and 113%, respectively, from April to June, their best quarter on record, as new artificial intelligence tools led to a surge in demand for more advanced cyber defenses. These tailwinds have helped to dispel initial concerns that the field would decline with the demise of software-as-a-service and emerge as a key stack in the AI era.
Driving this demand is the onslaught of Mythos class models that hackers can use to discover vulnerabilities in software and launch full-scale attacks. As a result, companies are scrambling to strengthen their cybersecurity defenses.
“What the Mythos moment demonstrated was that the world recognized that AI requires a cybersecurity ecosystem, starting with a state-of-the-art AI lab,” CrowdStrike CEO George Kurtz told analysts during an earnings call earlier this month. “This was a turning point for Mythos.”
Over the past few months, CrowdStrike and Palo Alto have positioned themselves at the forefront of the AI cyber race through Mythos, a model considered too powerful to release to the public.
CrowdStrike and Palo Alto Networks in the last 3 months
Both companies gained early access to this model as Project Glasswing partners and were early adopters of OpenAI’s Daybreak. The companies are also participating in high-profile meetings between big tech giants and the White House on protecting AI in this new normal.
Underpinning their success is a bet on agent security and identity access management that began long before the Mythos threat.
Earlier this year, Palo Alto completed a $25 billion acquisition of Israeli identity security company CyberArk, while CrowdStrike bet on startup SGNL.
Enterprises are now looking to cyber leaders to protect their platforms from highly capable and prolific AI agents that can carry out cyberattacks in seconds.
“From a product perspective, they’re in a great position to continue gaining market share,” said Shor Eyal, an analyst at TD Cowen. “We have all the materials we need.”
That demand is already starting to appear.
Palo Alto CEO Nikesh Arora told analysts last month that more than 1,200 customers have reached out to discuss cybersecurity since Mythos, and the company has held 800 meetings within six weeks.
CrowdStrike’s Kurtz announced this month that the company’s identity protection platform, Falcon Shield, ended the first quarter with 4x annual recurring revenue growth.
“Right now, there’s a lot of know-how that[companies]don’t have. They would rather partner with market leaders who have been building business models for decades,” Eyal said.
The rising profile of both CrowdStrike and Palo Alto has increased investor scrutiny and raised the bar for earnings expectations.
Earlier this month, both stocks posted strong earnings results and upbeat AI commentary, before falling because good wasn’t enough for investors looking for perfection.
“If investors were hoping for further growth momentum post-Mythos/Glasswing or as a result of regulatory/government pressure, we fear this disappointment will continue in the coming quarters,” Bernstein analysts said.
