AI is Expanding Attack Surface
Artificial intelligence is opening up fresh attack surfaces across networks, cloud environments, identity systems, endpoints, and data, which drives up demand for cybersecurity expenditures. Financial institutions including Goldman Sachs, Morgan Stanley, and J.P. Morgan increasingly point to AI as a catalyst for security investments. Specifically, Goldman Sachs notes that security is transitioning from being an AI casualty to an AI beneficiary.
Security Spending Could Accelerate
A potential inflection point in cybersecurity budgets is anticipated by Goldman Sachs as early as the final quarter of 2026 or the first half of 2027. Similarly, Morgan Stanley emphasizes that cybersecurity is already gaining from the expansion of AI infrastructure. Among its high-conviction exposures are Microsoft, PANW, CRWD, Cloudflare, and various identity vendors as enterprises fortify defenses around growing AI implementations.
Endpoint Security Gains Momentum
CrowdStrike reported an ARR of USD 5.84 billion, accompanied by a 51% acceleration in net new ARR, alongside Falcon Flex ARR surpassing USD 2.29 billion. Meanwhile, SentinelOne—though smaller in scale—is enhancing its profitability while simultaneously scaling Purple AI and its security-data platform. These milestones underscore the growing need for endpoint defense as AI broadens enterprise tech ecosystems.
Palo Alto Networks and Fortinet
Next-Generation Security ARR at Palo Alto Networks climbed 63% to reach USD 9.1 billion, while XSIAM ARR surged 70% to roughly USD 700 million. At the same time, Fortinet keeps integrating OT security, SecOps, SASE, and firewalls while sustaining exceptionally high margins, allowing both firms to cover multiple security demands tied to AI infrastructure.
Zero Trust and SASE
SASE and Zero Trust remain critical components of the AI security framework. Zscaler posted an ARR of USD 3.77 billion, Cloudflare achieved 36% revenue growth while positioning its global edge network as foundational architecture for protecting AI-agent traffic, and Netskope sustained growth close to 30%, though achieving profitability remains an ongoing process.
Identity Becomes an AI Security Opportunity
As corporations expand beyond the protection of human users, identity is turning into a novel AI-security frontier. Companies such as Okta, SailPoint, CrowdStrike, Microsoft Entra, and the combination of Palo Alto Networks and CyberArk are broadening their offerings to address autonomous AI agents and machine identities. With AI systems growing more autonomous, managing permissions and access is becoming critical for enterprise security divisions.
