Chief government officer at Palo Alto Networks Inc., Nikesh Arora attends the ninth version of the VivaTech commerce present on the Parc des Expositions de la Porte de Versailles on June 11, 2025, in Paris.
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Palo Alto Networks CEO Nikesh Arora addressed the current downdraft in software program shares, telling analysts in an earnings name that synthetic intelligence will not exchange cybersecurity “anytime quickly.”
“I am nonetheless confused why the market is treating AI as a risk to at the least cybersecurity,” he mentioned Tuesday. “I am unable to communicate for all of software program, however one factor we’re undoubtedly seeing is that prospects have discovered that they should drive extra consistency of their safety stack to have the ability to reply sooner utilizing AI.”
Shares sank 7% Wednesday following the cybersecurity firm’s fiscal second-quarter outcomes, which topped Wall Road estimates. Nevertheless, third-quarter earnings steerage fell in need of expectations.
The rise of recent AI instruments creating enterprise workflows or web sites in a matter of seconds has intensified a selloff in software program shares in current weeks.
These new instruments, from the likes of Anthropic and OpenAI, have left traders fretting over whether or not AI will completely disrupt their enterprise fashions.
To this point this 12 months, the iShares Expanded Tech-Software program Sector ETF has slumped greater than 23%. Palo Alto Networks has dropped 11% 12 months so far and 21% over the past 12 months.
However Arora believes AI is way from displacing the safety merchandise.
“It isn’t a secret,” he mentioned. “Each one among us is working onerous. Virtually each AI, each safety product has some model of a copilot that now runs in tandem with the product.”
Palo Alto has been betting huge on AI in current months and launched a set of recent agentic instruments within the fourth quarter.
The corporate has additionally invested closely in new acquisitions to scale cybersecurity capabilities for patrons within the age of refined AI.
Earlier this month, the corporate closed its large $25 billion acquisition of identification safety firm CyberArk and accomplished its buy of AI observability platform Chronosphere in January. Palo Alto introduced on Tuesday that it is shopping for Israeli cybersecurity startup Koi.
“These investments are a direct response to the inflections we see taking form in the market,” Arora advised analysts. “Whereas it is nonetheless early, the preliminary suggestions from our prospects has been very encouraging. We consider we’re now coming into the subsequent section of AI adoption.”
