Palo Alto Networks Inc. (NASDAQ:PANW) CEO Nikesh Arora warned Tuesday that many enterprises remain years away from completing cybersecurity modernization even as AI makes it faster and easier to discover and exploit vulnerabilities.
A New Kind of Customer Fear
“I suspect there will be some major breaches over the coming years because customers have not been able to get their transformation act in place, and that’s generally going to be a tailwind for all of us in this space,” Arora told analysts during the company’s fourth-quarter earnings call.
He added that the most common question he now hears from customers is what happens if their AI agents “go rogue” and end up “running to Hugging Face.”
In July, OpenAI disclosed that models operating during an internal cybersecurity evaluation circumvented isolation controls, gained internet access and compromised parts of Hugging Face’s infrastructure.
CrowdStrike Holdings Inc. (NASDAQ: CRWD) CEO George Kurtz made similar warnings in August, saying AI agents are increasingly operating outside their intended boundaries and are capable of stealing data, altering permissions and taking full control of systems at scale.
Securing Non-Human Identities
Palo Alto’s response centers on Idira, its identity security platform built from the CyberArk acquisition, which the company says gives it “a pole position” in securing non-human identities and AI agents.
The company is also leaning on its Frontier AI Critical Defense Program, which brings technology providers and critical-infrastructure organizations together to share vulnerability intelligence and deploy network-level ‘virtual patches’ before exploits can be weaponized.
Arora pointed to roughly $1 trillion in global cybersecurity debt that still needs to be modernized to defend against automated threats, arguing that because AI “operates instantaneously,” modernization must occur on unified platforms.
Strong Quarter, Bigger Guide
Palo Alto posted fourth-quarter revenue of $3.41 billion, beating estimates of $3.35 billion, according to Benzinga Pro, with adjusted earnings of $1.02 per share versus estimates of 98 cents.
For fiscal 2027, the company guided revenue to $14.10 billion to $14.20 billion, above estimates of $13.79 billion, and adjusted earnings to $4.16 to $4.19 per share.
Price Action: Palo Alto shares closed 5.24% at $362.09 on Tuesday and fell 1.9% in extended trading. The stock has climbed 101.87% year-to-date and 90.05% over the past year.
Benzinga Edge rankings show Palo Alto’s stock has a Momentum score in the 97th percentile and a Growth score in the 76th percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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