Two cybersecurity companies just reported their best financial quarters ever. But the very threat that drove those record results also set a dangerous high bar for future earnings. Investors now expect perfection.
The rally was ignited by the arrival of Mythos-class AI models, a fresh class of potent tools that let hackers find software weaknesses and launch automated attacks faster than ever before. This forced organizations to urgently strengthen their security measures against these new threats.
During an analyst call last month, Palo Alto Networks CEO Nikesh Arora disclosed that "over 1,200 customers reached out to discuss cybersecurity since Mythos, and we held 800 meetings within a six-week period."
The company also closed its mega $25 billion acquisition of Israeli identity security company CyberArk earlier in 2026.
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CrowdStrike also rode the wave. The company's Falcon Shield identity protection platform posted annual recurring revenue growth of four times at the end of its fiscal first quarter.
CEO George Kurtz explained, "What the Mythos moment proved is that the world, starting from the frontier AI labs themselves, realized that AI needs a cybersecurity ecosystem."
Each firm secured early access to the Mythos model through their involvement in Project Glasswing and also became early users of OpenAI's Daybreak. They also took part in notable White House discussions alongside big tech companies about safeguarding AI in the current landscape. The companies' strong results stem from an early strategic emphasis on identity access management and agentic security, a decision made long before the Mythos threats appeared.
TD Cowen analyst Shaul Eyal is bullish on both companies. "They're the best positioned to continue to gain market share from a product perspective. They have all the necessary ingredients."
The problem for investors is that expectations have now skyrocketed. Those gains already price in a lot of good news.
Analysts at Bernstein cautioned: "We worry this disappointment could continue in future quarters if investors are hoping for even more momentum to show up in growth post Mythos / Glasswing and as a result of regulatory/government pressure."
Earlier this month, shares of both firms declined even after they reported strong earnings and optimistic AI outlooks, as investors had expected even more impressive results.
The next few quarters will test whether both companies can keep delivering results that match the hype. If growth slows even a little, the stocks that soared on AI fears could get punished fast. Investors should watch closely for any signs that the AI-threat boost is fading.
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