Last week, the CEO of the world’s largest cybersecurity company said...

I spent eight years trying to get CEOs to talk about cybersecurity. I couldn’t get them to do it. And Dario (Anthropic CEO) did it in one swoop…

I’ve never had so many CEOs call their CIO and say, “Are we ready? What’s going to happen to us?”

That was the Palo Alto Networks (PANW) CEO on 20VC’s podcast.

There’s no doubt artificial intelligence (AI) makes it easier to hack systems. There was a recent story about a guy in Australia who used Anthropic’s latest AI model to break into his gym’s booking system!

It’s important for investors like us to separate our feelings from making money. When I put my investor hat on, I see AI being as biggest opportunity for cyber companies in our lifetimes.

• The latest AIs are cyber nightmares.

Anthropic’s Mythos is essentially an elite hacker that never sleeps.

The model was so powerful, it found and exploited hidden software flaws known as “zero-days.” It found them in every major operating system and web browser it tested.

A zero-day is basically an unlocked window nobody knows exists yet. Traditionally, skilled security researchers might spend months hunting for one. Within the first few weeks, Mythos had already uncovered thousands of them.

You can see why CEOs are panicking. Mythos is so powerful that Anthropic has kept it locked away from public access.

This has spawned a false narrative in the markets that goes something like: “Mythos makes cyberattacks much easier. This spells disaster for cyber stocks. The incumbents are unprepared. And maybe every company ends up relying on Anthropic and Claude for security.”

• I’m taking the other side of that trade.

By making cyberattacks easier, AI makes digital security more valuable. The cost of being unprotected rises much faster than the cost of protection.

More powerful attacks increase the amount of money companies are willing to spend protecting their systems. In Wall Street lingo, AI expands cybersecurity’s total addressable market.

The same frontier AI models hackers use also give defenders better tools to search for code vulnerabilities, detect strange behavior, and respond faster. Big cyber platforms can build these new AI tools into existing products.

That increases the value of the service they provide. Every jump in the capabilities of attackers raises the stakes for the companies trying to keep them out.

The more capable AI becomes, the more urgent security becomes… and the easier it is for chief security officers to get bigger budgets.

• Money is already starting to flood into cybersecurity firms.

In November 2024, we warned our readers about hackers using AI to launch stronger attacks.

Shouting from the rooftops about AI cyber risk is cheap. We prefer to focus on the opportunities it presents. Back then, we said: “Investing in the fight against cybercrime will become even more profitable in the coming years.”

We’ve hit that inflection point in 2026.

CrowdStrike Holding’s (CRWD) revenue growth slowed to 20% midway through last year. Since then, it’s climbed quarter after quarter. Same for Palo Alto Networks and all the major cyber providers. Their revenues are inflecting higher.

CEOs are asking whether their companies are safe. And that urgency is pushing cybersecurity higher up the budget list.

• Cyber stocks have another edge…

Trust becomes more valuable as the stakes rise.

A large company can buy security tools from dozens of vendors. That creates a patchwork quilt. One company protects laptops. Another watches the cloud. Another handles email traffic.

Every handoff creates another place where something can slip through the cracks. It also leaves security teams staring at separate dashboards while an attack may be unfolding in minutes.

Corporations are moving from small vendors to big cyber platforms. They don’t want 47 different cyber apps. They want fewer trusted providers.

Palo Alto Networks confirmed this “platformization” trend is already underway. Its latest results show customers moving several security tools onto its platforms.

• Cybersecurity is basically a “forever growth” megatrend in investing.

Companies will cut almost anything before they cut cyber spending.

The bad guys never stop. So the cat-and-mouse game between attackers and defenders guarantees a never-ending stream of demand.

The AI revolution only supercharges this megatrend.

These are the kinds of long-term investing opportunities I look for in The Jolt, my free investing letter. If you’d like to read my research on AI and other megatrends reshaping the market, you can sign up for our mailing list here.

Stephen McBride

Chief Analyst, RiskHedge