Palo Alto Networks CEO Nikesh Arora said AI is pushing companies to rethink nearly $1 trillion worth of legacy cybersecurity infrastructure as attackers increasingly use the technology to find and exploit vulnerabilities at machine speed.
Speaking to CNBC's Jim Cramer on Mad Money, Arora said security systems installed seven to 10 years ago were not built for AI-driven threats, forcing companies to rethink their cybersecurity architecture.
AI Turns Cybersecurity Into Growth Opportunity
Palo Alto Networks' latest earnings showed continued demand for cybersecurity spending. The company beat estimates for the fiscal fourth quarter and gave a strong outlook for the new fiscal year, pointing to growing demand for newer security solutions.
Arora said companies cannot successfully deploy AI without first strengthening their cybersecurity defences.
“There's approximately $1 trillion of global cybersecurity debt that must be modernized to defend against automated threats because they operate instantaneously,” he said during the company's earnings call.
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The opportunity represents a significant shift in how investors view AI's impact on cybersecurity. Earlier this year, cybersecurity stocks came under pressure amid concerns that increasingly capable AI models could make traditional security software obsolete.
The narrative has since changed as companies recognise that AI can be used by both defenders and attackers.
Mythos Changed The Conversation
Arora cited the emergence of Anthropic's Mythos model earlier this year as a turning point. The model demonstrated how AI could be used to exploit software vulnerabilities, prompting companies to take cybersecurity risks more seriously.
Palo Alto Networks shares have surged 113% since April 7, after being in negative territory for the year before that point.
Arora said the company has spoken with roughly 2,000 companies through its Frontier AI Critical Defense Program, formally introduced in August. The programme uses advanced AI models to test security defences, identify vulnerabilities and help companies modernise their infrastructure.
While the spending will not happen immediately, Arora said AI has increased both the potential size and duration of the cybersecurity opportunity.
“Not everything's going to happen next quarter,” he told Cramer, adding that AI changes the long-term growth rate and duration of the cybersecurity industry.
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