Eseandre Mordi
⬤ Cybersecurity stocks took a sharp hit after Bloomberg reported that Anthropic launched its Claude Code Security feature, built to automatically scan codebases for vulnerabilities and suggest targeted patches. Investor concern spiked quickly: if AI can do this automatically, what does that mean for companies whose entire business model depends on humans doing it manually?
⬤ The numbers told the story fast. CrowdStrike (CRWD) fell around 8%, Okta (OKTA) dropped roughly 9.2%, while Cloudflare and Zscaler also posted multi-percent declines. The Global X Cybersecurity ETF closed down 4.9%, hitting its lowest level since November 2023. Meanwhile, the iShares Expanded Tech-Software Sector ETF has now fallen more than 23% this year, putting it on track for its worst quarterly performance since the 2008 financial crisis.
⬤ Analysts are watching how large language model providers entering cybersecurity could compete directly for enterprise security budgets. Automated vulnerability detection was previously a human-driven process, and that's exactly where AI tools are moving in. The Jefferies note captured the mood: markets are repricing now, even if the long-term picture remains unclear.
⬤ What the CRWD and OKTA selloff really reflects is a broader recalibration happening across legacy software. As AI agents get embedded into enterprise workflows, demand patterns for traditional software products are being questioned. The tension isn't going away, and for cybersecurity equities, the next few quarters may bring more of the same volatility as investors weigh short-term disruption against long-term opportunity.
Eseandre Mordi
