Investors have spent the last two years chasing AI winners such as Nvidia Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN). But according to Wedbush analyst Dan Ives, another group may be quietly benefiting from the AI revolution: the cybersecurity companies.
As Palo Alto Networks, Inc. (NASDAQ:PANW) and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) head into earnings, Ives remains bullish on both names, arguing that artificial intelligence is creating a powerful new spending cycle for the sector.
The reason is simple: AI isn’t just making businesses smarter. It’s making hackers smarter too.
AI Is Expanding The Attack Surface
According to Ives, AI has dramatically lowered the cost, skill and time required to launch sophisticated cyberattacks while increasing their scale and precision.
At the same time, enterprises are rapidly deploying AI agents, autonomous workflows and cloud-based AI applications. That creates more APIs, more machine identities and more potential entry points for attackers.
In other words, every new AI deployment may also create a new cybersecurity challenge.
Rather than reducing the need for security tools, Ives believes AI is multiplying demand for endpoint protection, identity security, cloud security and automated threat detection.
Platform Players Keep Winning
That trend appears to be benefiting cybersecurity’s largest platform providers.
For Palo Alto Networks, Wedbush points to growing demand for integrated network, cloud and identity security solutions. The firm’s recent acquisitions, including CyberArk and Koi, are helping expand its platform while creating new cross-selling opportunities across its customer base.
CrowdStrike is pursuing a similar strategy through its Falcon platform, AI-powered Charlotte AI offering and partnerships with companies including Anthropic, OpenAI and IBM. Wedbush also highlighted growing momentum around CrowdStrike’s Project Quiltworks initiative as enterprises look to consolidate vendors.
The AI Security Arms Race
Perhaps the biggest takeaway from Ives’ note is that AI may be creating a cybersecurity arms race.
As attackers use AI to become faster and more sophisticated, enterprises are being forced to increase security spending to keep pace. That dynamic could push more customers toward large platform vendors capable of protecting identities, endpoints, cloud workloads and AI systems under a single umbrella.
For investors, the AI trade may no longer be limited to chips and cloud infrastructure.
According to Wedbush, Palo Alto Networks and CrowdStrike are emerging as two of the biggest cybersecurity beneficiaries of the AI era.
Photo: Poetra.RH / Shutterstock
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