Pernas Research
Founder of Pernas Research, Fundamental Equity Research, USAF Background
Cybersecurity incumbents Cloudflare, Palo Alto Networks and CrowdStrike have structural tailwinds as AI collapses attack costs and detection increasingly requires AI on defense. The AI-driven breach of Hugging Face, which TechCrunch reports affected internal datasets and credentials, is a data point for that view, and spending on AI-native security should widen. x.comÂ
AI should make Cloudflare, Palo Alto Networks and CrowdStrike more valuable as cybersecurity value shifts from finding vulnerabilities, which AI makes cheap and fast, to understanding exposure, risk graphs, attack paths and business consequences. That favors incumbents with deep telemetry, trusted deployment infrastructure and proprietary enterprise data; AI disproportionately favors larger cyber firms. The selloff after this year's Mythos release may be one of the era's most misunderstood. x.com x.comÂ
AI-powered attacks are spreading so fast that companies are unlikely to cut security budgets, even if they slow broader AI spending. The latest wave hit governments, banks, hospitals, grocery chains and businesses, while AI finds vulnerabilities and breaks in around the clock. That is why Cloudflare, Zscaler, CrowdStrike and Palo Alto Networks rose as broader AI concerns hit tech shares. x.com x.comÂ
Cybersecurity has one of software's strongest moats, and AI makes it more valuable because it also creates faster, more sophisticated attacks. As AI gets more capable, every layer of the security stack matters more: data security (Rubrik), identity (Okta), network (Zscaler, Netskope), endpoint (CrowdStrike, SentinelOne, Microsoft), exposure management (Qualys, Tenable) and code security (JFrog, GitLab). Rubrik, Qualys and Netskope are the largest cybersecurity positions. x.comÂ
Cybersecurity stocks' large run-up is at risk from a cheaper, open Chinese AI model. ValsAI reports that DeepSeek V4.1 Flash 1017 beat GPT 6 Sol on its offensive cybersecurity task; DeepSeek is far cheaper to run than a closed US model. x.comÂ
AI agents expand the enterprise attack surface, creating demand for cybersecurity and agent-aware defenses. The PHP2Shell vulnerability discovery underscored AI's role in finding and exploiting flaws; prompt injection, machine identities, model supply chains and data exfiltration add risks. Morgan Stanley called cybersecurity a major structural winner as model supply explodes. x.comÂ
Cybersecurity stocks have a powerful long-term tailwind because more AI means more complexity, more attack surface and more need for security. CrowdStrike, SentinelOne, Palo Alto Networks, Zscaler, Fortinet, Okta and Rubrik moved up strongly premarket after Anthropic CEO Dario Amodei published an essay arguing the AI industry should slow down, with Anthropic committing to give third-party evaluators permanent access to verify its safety measures. The market may be connecting those dots. x.comÂ
Cybersecurity is the real bubble right now, because greater importance in the age of AI does not justify paying valuations like 40x sales for names such as Cloudflare, CrowdStrike and Palo Alto Networks. x.comÂ
CrowdStrike and Palo Alto Networks win either way on AI. More AI means more attack surface, while less AI means budgets rotate back to security. x.comÂ
Cloudflare has three AI-driven trends working in its favor. AI will uncover more vulnerabilities; protection against more AI bots, agents and crawlers is needed; and its developer platform, including Workers, is becoming the default for agent-related development. CrowdStrike is not a favorite. x.comÂ
CrowdStrike's AI risk is limited but real, because it is tied to white-collar workers and their devices. A prolonged fall in white-collar employment could cut Falcon agents deployed, and an advanced AI that clearly solved big parts of cybersecurity could squeeze budgets. Against that, its core has been machine learning from day one, and AI raises security spending as attackers use it; its CEO says Charlotte usage rose over 6x. It trades at 21x EV/ARR with ARR up 24% and 0% GAAP operating margin. … Show more
Cybersecurity stocks benefit as investors rotate toward the layers already monetizing AI and away from those still building the capacity to run it. CrowdStrike jumped 13.9% and led a cybersecurity rally while the whole semiconductor complex sold off on weekend calls to slow AI development. x.comÂ
