CrowdStrike and Okta shares surged on Thursday after earnings showed that artificial intelligence adoption is pushing customers to spend more on cybersecurity tools.
Both companies beat Wall Street's estimates for the fiscal second quarter and raised their forecasts, citing the AI agent threat. CrowdStrike gained 15% while Okta surged 21%. The broader cyber sector rallied as well, with Palo Alto Networks, SailPoint, Zscaler and Rubrik up about 9%.
"We're in an arms race," CrowdStrike CEO George Kurtz said during an earnings call with analysts on Wednesday. "AI is driving more cyberattacks. AI is driving more cyber spending. AI is driving a clear divide between the cybersecurity companies that solve problems and those that compound problems."
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The company's flexible Falcon platform offering, which lets customers switch out security tools, doubled year over year, he added.
The release of advanced AI models like Anthropic's Mythos, and attacks such as OpenAI's Hugging Face hack, have raised the stakes for the cybersecurity sector in recent months, forcing businesses to scale their security stacks to combat mounting attacks orchestrated by AI agents.
One clear winner has been identity security tools that help businesses secure and manage the explosion in AI agents. Amid this backdrop, cybersecurity stocks have rocketed to fresh highs, with both CrowdStrike and Okta up more than 80% each.
Wednesday's earnings marked the unofficial start of the reporting season for the cyber sector, with Palo Alto Networks and Zscaler among the companies set to report next week,
Analysts at Deutsche Bank remain "optimistic" about the sector's growth in the AI era, but are waiting on upcoming reports to solidify near-term demand trends.
Okta CEO Todd McKinnon touted the company's early success with new products, which accounted for nearly a third of total bookings.
"While adoption remains in its early stages, momentum is growing, and those advantages are translated into customer demand reflected in the dozens of AI deals we won in Q2," he said on a Wednesday earnings call.
Following the results, analysts at Bank of America upgraded shares to neutral from an underperform rating on accelerating AI growth, but warned of limited upside ahead.
"We are increasingly encouraged by Okta's AI opportunity and early customer traction," the firm wrote. "However, adoption remains very early, disclosed metrics remain limited, and management continues to view AI as immaterial to FY27 results."
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