palo alto networks CEO Nikesh Arora said on Tuesday that the advent of AI is forcing companies to overhaul their roughly $1 trillion aging cybersecurity infrastructure built for a pre-AI world.
“Anything that was introduced seven or 10 years ago is not ready to handle AI at machine speed,” Arora said on CNBC’s Jim Cramer’s “Mad Money.” “We need to rethink our cyber architecture.”
Palo Alto’s Tuesday earnings report suggests the urgency is already reflected in the business. The company beat expectations for the fourth quarter and announced strong outlook for the new fiscal year. Cramer’s Charitable Trust, a portfolio managed by CNBC Investing Club, owns Palo Alto and Cyberpeer. cloud strike.
Arora predicts that opportunities will expand as AI allows attackers to find and exploit vulnerabilities faster than ever before, forcing businesses to modernize security defenses not designed for automated threats. “If you don’t understand cybersecurity properly, you can’t successfully implement AI,” he says.
“Global cybersecurity debt is nearly $1 trillion, and automated threats are instantaneous, so we need to modernize to protect against them,” Arora said on an earnings call in Palo Alto.
This opportunity represents a dramatic reversal from how investors viewed AI’s impact on cybersecurity earlier this year. Cybersecurity stocks such as Palo Alto came under pressure from concerns that increasingly sophisticated AI models could subvert traditional security software. Ultimately, the market began to see AI as a growth driver as investors realized that attackers could weaponize the same technology.
“Nine months ago, we were found guilty and convicted of a near-death crime because an AI tried to eat our lunch, breakfast, and dinner,” Arora told Kramer. “It doesn’t seem like that. It looks like we’ll be having a feast with them.”
Arora pointed to the introduction of Anthropic’s Mythos model earlier this year as a turning point. Mythos has caused businesses to take cybersecurity more seriously as this model can easily be used to exploit software vulnerabilities. Palo Alto stock has soared 113% since April 7th. Prior to that, the stock price was in the red in 2026.
“For eight years, I’ve been trying to tell customers that they’re not ready, and[Anthropic CEO Dario Amodei]did it in one event. We just launched Mythos,” Arora said on CNBC.
Arora said Palo Alto has been in conversations with about 2,000 companies about its Frontier AI Critical Defense program, which uses advanced AI models to test customer defenses, identify vulnerabilities and help modernize security infrastructure. The company officially introduced the initiative in August.
While Arora cautioned that the spending won’t materialize all at once, he said AI has fundamentally expanded the scale and duration of opportunities in the cybersecurity industry.
“Not everything is going to happen next quarter,” Arora told Kramer. “But all I’m saying is this will change the long-term growth rate and duration of cybersecurity, not just in Palo Alto but across the industry.”
