AI 'Ghost Trade' Fears Slam Cybersecurity Stocks, But Analysts See Upside

Wedbush's Dan Ives says AI is actually driving a massive demand tailwind for industry leaders like CrowdStrike, Palo Alto Networks, and Zscaler.

Published on Feb. 23, 2026

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Cybersecurity stocks like CrowdStrike, Palo Alto Networks, and Zscaler have faced a selloff due to fears around AI-powered security tools, in what Wedbush's Dan Ives calls an 'AI Ghost Trade.' However, Ives argues this reaction is misguided, as AI is actually accelerating cyber threats and creating the 'biggest total addressable market opportunity' in cybersecurity history. The firm believes AI will drive increased demand for established industry leaders as enterprises ramp up spending to defend against the evolving threat landscape.

Why it matters

The rapid advancement of AI capabilities has sparked concerns that new AI-powered security tools could disrupt legacy cybersecurity providers. However, this narrative appears to be an overreaction, as AI is actually expanding the cyber threat landscape and creating significant growth opportunities for leading cybersecurity firms to capitalize on increased enterprise spending.

The details

Wedbush's conversations with CIOs and IT professionals suggest the emergence of AI security tools is validating cybersecurity as 'the next frontier for the AI Revolution,' not a threat to incumbents. AI is dramatically accelerating cyber threats, reducing the time needed to launch sophisticated attacks from weeks to hours, and expanding the number of vulnerable endpoints across cloud systems, APIs, and AI models. Wedbush believes this dynamic is creating a massive demand tailwind for established leaders like CrowdStrike, Palo Alto Networks, and Zscaler, as enterprises ramp up cybersecurity spending to defend against the rapidly evolving AI-driven threat landscape.

  • The recent cybersecurity stock selloff occurred on February 23, 2026.

The players

CrowdStrike Holdings

An American cybersecurity technology company that provides cloud-delivered protection of endpoints, cloud workloads, identity, and data.

Palo Alto Networks

An American multinational cybersecurity company that delivers firewall, cloud security, and other cybersecurity solutions to enterprises, service providers, and government entities.

Zscaler

An American cloud-based information security company that provides a platform for web security, threat protection, and compliance.

Dan Ives

Managing Director and Senior Equity Analyst at Wedbush Securities, covering the technology sector.

Anthropic

An artificial intelligence research company that develops advanced AI systems, including security-focused AI tools.

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What they’re saying

“AI represents 'the biggest total addressable market opportunity to the cyber security space in its history,' creating a massive demand tailwind for established leaders.”

— Dan Ives, Managing Director and Senior Equity Analyst, Wedbush Securities (Benzinga)

“The emergence of AI security tools actually validates cybersecurity as 'the next frontier for the AI Revolution,' not a threat to incumbents.”

— Dan Ives, Managing Director and Senior Equity Analyst, Wedbush Securities (Benzinga)

What’s next

Wedbush expects CrowdStrike, Palo Alto Networks, and Zscaler to emerge as clear winners as enterprises ramp up cybersecurity spending to defend against the rapidly evolving AI-driven threat landscape.

The takeaway

The recent selloff in cybersecurity stocks like CrowdStrike, Palo Alto Networks, and Zscaler appears to be an overreaction to the rise of AI-powered security tools. In reality, AI is expanding the cyber threat landscape and creating significant growth opportunities for leading cybersecurity providers, as enterprises increase spending to defend against the rapidly evolving AI-driven threats.