The September 14 AI selloff produced an odd winner: cybersecurity. As chip stocks fell after frontier AI leaders called for slower development, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and Palo Alto Networks, Inc. (NASDAQ:PANW) both traded higher as investors also digested fresh concern about AI-enabled cyber risk and the Revolut breach.
The move suggests Wall Street may be separating the cost of building smarter models from the cost of securing systems that already exist.
Source: unsplash
Slower frontier progress can still mean more attack surface
CrowdStrike’s latest quarter gives the optimistic reading substance. Revenue reached $1.47 billion, annual recurring revenue rose 25% to $5.84 billion, and record net new ARR reached $332.8 million. CrowdStrike Holdings, Inc. can sell security into endpoints, cloud workloads, identities and AI agents regardless of whether the next frontier model arrives a few months later.
Valuation and commoditization pull the other way. If third-party foundation models supply more of the reasoning inside security products, competing vendors can license similar intelligence. CrowdStrike still has to prove that AI increases its pricing power rather than simply raising everyone else’s product quality.
Palo Alto Networks, Inc. has a broader platform strategy and is buying capabilities around agentic workflows. That breadth can make it easier for large customers to consolidate security spending. The downside is integration. Acquisitions increase debt, shares outstanding and execution complexity, while management expects some next-generation security growth to decelerate after recent acquisition-assisted comparisons.
Hedge funds increased both positions before today’s rotation
Insider Monkey’s database showed CrowdStrike ownership rising to 89 hedge funds in Q2 2026 from 79 in Q1. D. E. Shaw held 8,533,204 common shares after increasing its position 18%. Palo Alto also reached 89 holders, up from 87, while Fisher Asset Management increased its position 2,143% to roughly 5.8 million shares. The filings predate the September 14 price action.
CrowdStrike had 24,353,332 shares sold short on August 31, equal to 2.42% of float, with 2.16 days to cover.
The rally does not mean cybersecurity is insulated from an AI slowdown. Fewer deployments could eventually reduce new workloads to secure. But today’s security burden comes from the AI already being deployed, including autonomous agents that can make mistakes at machine speed. That makes CrowdStrike and Palo Alto a different kind of AI trade: less dependent on training the next giant model and more dependent on enterprises being nervous about what current models can already do.
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