'AI Ghost Trade' Fears Slam CrowdStrike, Palo Alto Stock - But Dan Ives Sees Winners

Cybersecurity stocks are getting hit by what Wedbush Securities’ Dan Ives calls an "AI Ghost Trade" — but the firm believes investors are misreading the threat.

Shares of Crowdstrike Holdings Inc (NASDAQ:CRWD), Palo Alto Networks Inc (NASDAQ:PANW), and Zscaler Inc (NASDAQ:ZS) have come under pressure following the release of new AI-driven security tools, as investors worry artificial intelligence could disrupt traditional cyber vendors. These stocks are down 17%, 13% and 17%, respectively, over the past five days alone.

Ives said those fears have created a "huge disconnected overhang" on the sector, arguing the selloff reflects panic rather than fundamentals.

‘AI Ghost Trade' Driving Cyber Selloff

The concern stems from rapid advances in AI security tools, including new offerings from Anthropic and other AI firms. Investors fear these platforms could bypass legacy cybersecurity providers.

But Wedbush's conversations with dozens of chief information security officers and IT professionals suggest the opposite dynamic is unfolding. The firm said the emergence of AI security tools actually validates cybersecurity as "the next frontier for the AI Revolution," not a threat to incumbents.

Instead, AI is dramatically accelerating cyber threats, reducing the time needed to launch sophisticated attacks from weeks to hours. It is also expanding the number of vulnerable endpoints across cloud systems, APIs, and AI models.

Biggest Opportunity In Cybersecurity History

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

Ives continues to view CrowdStrike as the "gold standard of cybersecurity," citing its Falcon platform and strong positioning against emerging AI-driven threats.

Palo Alto Networks also remains a top pick, and Ives sees its CyberArk acquisition as a potential "game changer" as the company expands its AI security capabilities.

Zscaler, meanwhile, is seen as a "premier name to own," with rising AI adoption driving increased demand for Zero Trust and cloud security solutions.

Ives expects CrowdStrike, Palo Alto, and Zscaler to emerge as clear winners as enterprises ramp cybersecurity spending to defend against the rapidly evolving AI threat landscape. In his view, the recent selloff reflects the wrong reaction to one of the sector's biggest long-term growth opportunities.