Cybersecurity stocks could have more room to run, according to JPMorgan, which sees recent developments in artificial intelligence as a tailwind rather than a threat for leading players like Palo Alto Networks and CrowdStrike.
The bank reiterated its overweight ratings on both companies following Anthropic’s rollout of its advanced AI model, Claude Mythos Preview, as part of its Project Glasswing initiative.
Rather than disrupting incumbents, JPMorgan argues the move reinforces their role in the evolving cybersecurity ecosystem.
Partnership with Anthropic strengthens positioning
Anthropic’s Project Glasswing brings together more than 40 companies, including major technology firms, to deploy AI tools aimed at detecting and fixing software vulnerabilities.
Palo Alto Networks and CrowdStrike are among the founding partners, positioning them at the center of this initiative.
JPMorgan analyst Brian Essex said the collaboration is a positive signal for the sector.
“The near-term read from Glasswing is constructive for Security, particularly for CRWD and PANW which were named founding partners and essential layers in the defensive stack, rather than competitive targets,” Essex wrote.
“We view the partnership as a logical step and an indication that Security vendors are essential partners in the effort to fight AI with AI.”
The announcement helped lift investor sentiment, with shares of both companies rising following the news, reversing some of their earlier declines this year.
Palo Alto stock gained 2% on Wednesday, extending from 4% gain on Tuesday. Meanwhile, CrowdStrike surged 1.9% in the session, adding on from 6% gain from the previous session.
AI seen as a demand driver, not a disruption risk
Concerns had emerged in recent weeks that increasingly sophisticated AI models could replace traditional cybersecurity tools.
Those fears intensified after reports of Anthropic’s Mythos model surfaced, pressuring sector valuations.
However, JPMorgan believes the latest partnership changes that narrative. By limiting access to vetted defensive use cases and collaborating with established vendors, Anthropic is positioning itself as an enabler rather than a competitor.
“Anthropic was entering the security tool space as a potential disruptor; today it is partnering with incumbents and restricting model access to vetted defensive use,” Essex noted.
At the same time, AI is expanding the attack surface for enterprises, increasing the need for advanced protection. Essex highlighted that AI is “compounding the security challenge,” with “over 50% of enterprise AI usage [happens] through personal instances outside IT visibility.”
This so-called “shadow AI” trend is expected to drive incremental spending on cybersecurity solutions.
Strong fundamentals support further upside
Beyond the near-term catalyst, JPMorgan points to structural advantages that continue to support both companies’ long-term outlook.
“Security vendors are beginning to capture portions of budgets outside of traditional security as enterprises begin to bring shadow AI under control or CISOs are asked to secure AI-driven projects for business groups outside of IT,” Essex said.
He added that “the data moats, network effects, and switching costs across PANW, CRWD … remain intact with these vendors positioned to benefit from AI-related demand.”
JPMorgan set a 12-month price target of $200 for Palo Alto Networks and $475 for CrowdStrike, implying further upside from current levels.
Despite recent volatility and concerns about AI disruption, the bank’s view suggests that the shift toward AI-driven security could ultimately strengthen, rather than weaken, the position of leading cybersecurity firms.
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