Palo Alto Networks and CrowdStrike are the clearest winners from a surge in AI-driven cybersecurity demand, according to Wedbush, which has raised its price targets on both stocks.
Analyst Dan Ives lifted his target on Palo Alto Networks, the network and cloud security platform, to $300 from $225 and his target on CrowdStrike, the endpoint and cloud security group, to $700 from $550, maintaining outperform ratings on both.
Ives argued that the rapid adoption of artificial intelligence is transforming the threat landscape, shrinking attack lifecycles from weeks to minutes and forcing enterprises to consolidate vendors, improve visibility and automate their responses.
Rather than undermining the industry, AI is proving to be the biggest growth catalyst for cybersecurity in the past 20 years, Ives said in note.
Channel checks conducted by Wedbush found that eight out of ten customers believe the incumbent cybersecurity vendors with the right products and AI roadmap will be the long-term winners.
Budgets are running at 29% of plan, ahead of a typical April pace of 25%, signalling stable spending despite a turbulent quarter.
Pipelines are described as good but not record-setting, with the broader read suggesting cyber spending has held up well and that the demand backdrop heading into the second half of 2026 remains constructive.
Identity security is the top priority for chief information officers and chief information security officers, with data security close behind as companies accelerate their AI strategies.
Endpoint solutions, by contrast, are slipping down the priority list as AI deployments expand across enterprises and federal agencies.
For Palo Alto Networks, the completion of its acquisition of CyberArk, now rebranded as Idira, positions the company as the only vendor offering unified coverage across network, cloud and identity security at scale.
Momentum behind Idira and the Prisma AIRS platform underscores how rapidly identity and AI security are becoming durable demand drivers, Wedbush said.
For CrowdStrike, the 2026 financial year marked a record period in which it became the first pure-play cybersecurity vendor to cross several major milestones.
Its Charlotte AI agentic security operations centre (SOC) orchestration and AI Detection and Response tools are increasingly positioning the Falcon platform as mission-critical infrastructure for enterprises securing AI from GPU to agent to prompt.
Wedbush dismissed the guidance shortfall from Zscaler, the cloud security specialist, as a company-specific execution issue rather than a signal of broader sector weakness.
Ives also pushed back on the idea that AI laboratories could disrupt most of the cybersecurity market, arguing that the industry extends far beyond code scanning and requires high levels of trust, reliability, broad platform integrations and proprietary data sets that large language model developers are not positioned to replicate.