×
The cybersecurity stocks most benefiting from AI
Written by
Published on
Join our daily newsletter for breaking news, product launches and deals, research breakdowns, and other industry-leading AI coverage
Join Now

AI’s impact on cybersecurity: The integration of artificial intelligence in cybersecurity is creating both new opportunities for protection and increased threats from sophisticated attacks.

  • The cybersecurity industry is experiencing a natural affinity with AI, as both cyber threats and defenses are computer-generated.
  • Generative AI platforms are now emerging to enable threat detection and prevention before attacks occur.
  • According to McKinsey, 51% of organizations believe generative AI is driving new cybersecurity risks, but only 33% are actively working to mitigate these risks.
  • The World Economic Forum predicts AI could push cyber incidents and data breaches to a new record high in 2024, following a 72% year-over-year increase in 2023.

Leading cybersecurity companies’ AI initiatives: Major players in the industry are rapidly developing and deploying AI-powered solutions to address the evolving threat landscape.

  • Palo Alto Networks has seen its AI Annual Recurring Revenue (ARR) grow 4x year-over-year, surpassing $200 million.
  • Zscaler’s AI Analytics solutions contributed nearly 3 points to new and upsell business growth in Q4 2023.
  • Fortinet reported that AI-driven Security Operations (SecOps) accounted for 10% of total billings in fiscal Q2.
  • CrowdStrike is developing Charlotte AI, a generative AI-powered security analyst, though it has not disclosed specific AI-related revenue figures.

Palo Alto Networks: Leading the AI charge: The company is experiencing rapid growth in its AI-powered offerings and is positioning itself as a leader in the AI-cybersecurity space.

  • Palo Alto’s AI ARR accounts for nearly 5% of its Next-Gen Security (NGS) ARR.
  • The company’s Cortex XSIAM platform has seen a 4x year-over-year increase in customer count.
  • Palo Alto expects its NGS ARR to grow 34% to 36% year-over-year in Q1 of fiscal 2025, reaching between $4.33 billion to $4.38 billion.

Zscaler: Investing heavily in AI infrastructure: The company is seeing strong early adoption of its AI Analytics solutions and is ramping up investments to support future growth.

  • AI Analytics contributed 2 points to Zscaler’s growth for the entire fiscal 2024.
  • The company is increasing data center CapEx by approximately 3 points as a percentage of revenue compared to fiscal 2024.
  • Zscaler expects its free cash flow margin to decline from 27% in FY24 to 23.5% to 24% in FY25 due to these investments.

Fortinet: Steady AI contribution with room for growth: While Fortinet’s AI-driven SecOps have maintained a consistent share of billings, the company is taking steps to expand its AI capabilities.

  • AI-driven SecOps accounted for 10% of total billings in fiscal Q2, flat year-over-year.
  • Fortinet acquired Lacework to broaden its AI security portfolio, potentially adding $10 billion to its total addressable market (TAM).

CrowdStrike: Focusing on AI-powered efficiency: Although not disclosing specific AI revenue figures, CrowdStrike is leveraging AI to enhance its product offerings and improve operational efficiency.

  • The company sees a $225 billion AI-native security TAM by 2028.
  • CrowdStrike’s Charlotte AI is being trained for various cybersecurity tasks, including malware reverse engineering and incident response.
  • The adoption of CrowdStrike’s modules remains strong, with 45% of customers using 6+ modules and 29% using 7+ modules.

The long-term potential of AI in cybersecurity: While current AI-related revenue figures may seem modest, the industry is poised for significant growth as AI capabilities mature and threat landscapes evolve.

  • Cybersecurity stocks are commanding premium valuations due to their early exposure to AI revenue streams.
  • The sector is one of the few in the software industry where tangible AI revenue is already being generated.
  • As AI continues to reshape both cyber threats and defenses, companies that successfully leverage AI technology may be well-positioned for long-term growth in the cybersecurity market.
Cybersecurity Stocks Seeing Early AI Gains

Recent News

Nvidia’s new AI agents can search and summarize huge quantities of visual data

NVIDIA's new AI Blueprint combines computer vision and generative AI to enable efficient analysis of video and image content, with potential applications across industries and smart city initiatives.

How Boulder schools balance AI innovation with student data protection

Colorado school districts embrace AI in classrooms, focusing on ethical use and data privacy while preparing students for a tech-driven future.

Microsoft Copilot Vision nears launch — here’s what we know right now

Microsoft's new AI feature can analyze on-screen content, offering contextual assistance without the need for additional searches or explanations.