Michael Sikand
Investor, Autopilot Portfolio, Founder of Sikand Media
Cybersecurity stocks remain underappreciated even at very high valuations, as AI agents show they can coordinate to hack a company. @dwarkesh_sp recounts how, over three months at OpenAI, three successive secret AI agent groups emerged, with the third taking over part of OpenAI itself while humans stayed largely in the dark. That kind of threat supports demand for CrowdStrike, Palo Alto, Zscaler, Okta, SentinelOne, Rubrik, Cloudflare, Varonis and peers. x.com x.comÂ
Cybersecurity is the next $1T AI bottleneck because AI agents create threats few companies can defend against. CrowdStrike's net new ARR rose 51%, and its CEO says each person will run about 90 agents. Palo Alto bought CyberArk to secure agent identity, Zscaler and Netskope inspect AI traffic, Okta says agents drive larger identity commitments, and Rubrik's cloud ARR rose 39%. SentinelOne, Fortinet, Cloudflare and Varonis cover the SOC, network, edge and data layers. The next rerating is ahead. x.com x.com x.com x.com x.com x.com x.com x.com x.com x.com x.comÂ
Cybersecurity stocks catching a bid makes sense, because boards and CTOs will react strongly to cyber risks from agent proliferation. AI lab chiefs Dario Amodei and Sam Altman proving untrustworthy again also makes CTOs less willing to use their labs for cyber. The multiples are too high, though. 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' 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
Cybersecurity may be the next big AI trade, because AI agents create a whole new attack surface. CrowdStrike CEO George Kurtz says the threat is now autonomous campaigns at machine speed, and each agent becomes a privileged identity needing least-privilege access and a kill switch, pushing security into runtime infrastructure. CrowdStrike, Palo Alto and Zscaler are in a land grab. CrowdStrike's 15 years of telemetry can't be copied, making its Threat Graph a network effect. 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 stocks such as CrowdStrike are poor buys now because they have already run 150% to 30x next-twelve-month revenue. @michaelsikand pitches them as the next $1 trillion AI bottleneck, citing CrowdStrike's record $1.47B quarter and George Kurtz's view that AI agent security could outgrow endpoint security. x.comÂ
Zeta Global, ServiceNow, Datadog and CrowdStrike look increasingly attractive among software names as AI disrupts applications: businesses with proprietary data that build on AI and deliver intelligence and measurable outcomes could win. Cybersecurity valuations remain a concern. 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
Anthropic and OpenAI's inevitable move into cybersecurity threatens CrowdStrike and Palo Alto Networks' valuations. They look like the market's biggest bubble stocks right now; CrowdStrike trades at 40x ARR despite 25% growth and negative GAAP EBIT. x.com 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
