Cybersecurity has become one of the steadiest growth stories in tech — and artificial intelligence is the reason, cutting both ways at once.
Record-setting quarters
Both industry leaders have posted standout recent results. Palo Alto Networks reported roughly $3 billion in quarterly revenue, up about 31% year over year, with its closely watched "next-generation security" annual recurring revenue climbing past $8 billion (up around 60%), per the company's results. CrowdStrike, the endpoint-security specialist, posted about $1.39 billion in quarterly revenue, up roughly 26%, with annual recurring revenue (ARR) of about $5.5 billion, it reported.
(Explainer: ARR is the annualized value of subscription contracts — the key gauge for software companies, since it reflects recurring, predictable revenue rather than one-off sales.)
AI: both the threat and the sales pitch
The boom rests on a genuine paradox. AI is arming attackers: criminals now use it to generate malware, automate reconnaissance and craft personalized phishing and deepfake scams at scale — the kind of AI-driven fraud Boursel has covered. Threats are faster and harder to spot.
But the same wave drives demand for Palo Alto's and CrowdStrike's products, because both sell AI-powered defense — software that uses machine learning to spot anomalies, hunt threats and respond automatically in milliseconds, far faster than human analysts. In short, AI is simultaneously the danger companies fear and the tool they're buying to fight it. That makes the security firms rare net winners from the AI threat surge.
The strategy: sell the whole platform
Both companies are pushing "platformization" — getting customers to buy their entire integrated suite rather than a patchwork of point products from many vendors. Bundling boosts recurring revenue and locks customers in, since ripping out a whole platform is far harder than swapping one tool.
They're also buying their way to completeness. Palo Alto has struck large acquisitions — including a major deal for identity-security firm CyberArk — to fill gaps, while CrowdStrike has snapped up smaller specialists in areas like browser and identity security. The goal for each: become the single control plane for a company's defenses.
Why security spending holds up
Cybersecurity budgets have a useful trait for these firms: they tend to be resilient. Even when companies trim IT spending, security is increasingly treated as a non-negotiable — a board-level and regulatory requirement, not a discretionary nice-to-have. A breach can cost far more than the defense. The AI-charged threat landscape has only hardened that view, helping explain why both companies are growing revenue 25–30%+ and ARR even faster (a sign of pricing power).
Why it matters
For Palo Alto and CrowdStrike, the AI era is turning a real-world danger into sticky, high-margin recurring revenue — and the two are pulling away from smaller rivals. For companies everywhere, it's a reminder that AI's risks come with rising security bills. And for the broader AI story Boursel tracks — huge spending, uncertain payoffs — cybersecurity stands out as a corner where the business case is already concrete: the threats are real, the budgets are defensive, and the spending keeps coming. Boursel offers no view on either stock; the takeaway is that in the AI arms race, the companies selling the armor are among the clearest winners.
