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cloud strike and Octa Shares soared Thursday after earnings showed that the adoption of artificial intelligence is causing customers to spend more on cybersecurity tools.
Both companies beat Wall Street expectations for their fiscal second quarter and raised their expectations, citing the threat of AI agents. CrowdStrike rose 15% and Octa soared 21%. The broader cyber sector has recovered as well. palo alto networks, sail point, Z scaler and rubric It increased by about 9%.
“We’re in an arms race,” CrowdStrike CEO George Kurtz said on an earnings call with analysts on Wednesday. “AI is driving more cyber attacks, and AI is driving more cyber spending. AI is creating a clear divide between cybersecurity companies that solve problems and those that make them worse.”
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He added that the company’s flexible Falcon platform offering, which allows customers to switch between security tools, has doubled year-over-year.
The release of advanced AI models like Anthropic’s Mythos and attacks like OpenAI‘s “Hugging Face” hack has heightened risks in the cybersecurity space in recent months, forcing businesses to scale their security stacks to counter the rise in attacks orchestrated by AI agents.
One clear winner is identity security tools that help businesses protect and manage the exploding number of AI agents. Against this backdrop, cybersecurity stocks hit new highs, with CrowdStrike and Octa each rising more than 80%.
Wednesday’s results marked the unofficial start of reporting season for Palo Alto Networks and the cyber sector. Z scaler Among the companies scheduled to report next week are:
Deutsche Bank analysts remain “optimistic” about the sector’s growth in the AI era, but are awaiting future reports that will confirm short-term demand trends.
Okta CEO Todd McKinnon touted the company’s early success with new products accounting for nearly a third of total bookings.
“While adoption is still in its early stages, momentum is building. These benefits are reflected in customer demand and the dozens of AI deals we won in the second quarter,” he said on Wednesday’s earnings call.
Following the results, Bank of America analysts upgraded the stock from an underperform rating to neutral, citing accelerating growth in AI, but warned that future upside is limited.
“We are increasingly encouraged by Okta’s AI opportunity and early customer traction,” the company wrote. “However, implementation is still at a very early stage, disclosed metrics remain limited, and management continues to view AI as not material to FY27 results.”
WATCH: Jefferies’ Joseph Gallo says cyber spending will benefit from AI anxiety over the next few quarters
