Cybersecurity stocks rise after IBM flags AI-driven spending rethink

Cybersecurity shares climbed Tuesday after IBM CEO Arvind Krishna said businesses are reassessing technology budgets because of rising concerns about AI-enabled cyber threats. For retail investors, the move shows how quickly comments from a major enterprise software buyer and seller can shift expectations across an entire sector.

Krishna’s comments came alongside IBM’s preliminary second-quarter results. In a letter to investors, he said customers moved more spending toward servers and memory during the period, while “rapidly-evolving, industry-wide cybersecurity concerns” became a distraction for buyers.

That matters because cybersecurity companies sell tools that protect corporate networks, cloud systems, identities and devices. If businesses believe new artificial intelligence models could make attacks faster or harder to detect, investors may expect more demand for those tools, even if customers pause some broader software decisions while they reset budgets.

IBM says customers are pausing some deals

Krishna told CNBC’s Sara Eisen on Tuesday that some large transactions were delayed late in the quarter as companies reconsidered how they should allocate technology spending.

“Mythos is making people pause to say, wait, how much do I need to spend on cyber? They’re pausing on new deals until they know,” Krishna told Eisen, referring to Anthropic’s advanced AI model. He added, “We don’t see our software being disrupted by AI at all.”

CNBC reported that the development of advanced AI systems such as Anthropic’s Mythos has increased anxiety on Wall Street about faster and more sophisticated cyberattacks. The concern is straightforward: AI can potentially help attackers automate parts of their work, while companies must spend to defend against new tactics.

Security names move higher

The market reaction was broad across listed cybersecurity vendors. CNBC quoted Okta, Netskope and CrowdStrike as rising by roughly 10% each on Tuesday. SailPoint, Zscaler and SentinelOne each gained about 8%, while Palo Alto Networks rose about 7%.

The moves grouped together companies with different specialties. Okta focuses on identity access, which helps businesses control who can log into systems. CrowdStrike and SentinelOne are known for endpoint security, which protects devices such as laptops and servers. Zscaler sells cloud security tools, while Palo Alto Networks is one of the larger cybersecurity platform companies.

The common thread is corporate defense spending. When a large company such as IBM says customers are rethinking budgets because of cyber risk, investors often look across the sector for companies that could benefit from that shift.

AI spending remains complicated

Krishna’s remarks also show that AI is not just creating new revenue opportunities for technology companies. It is changing how customers decide what to buy first.

According to IBM’s preliminary results, some customers prioritized hardware such as servers and memory, while other deals slowed as buyers weighed cybersecurity needs. That mix can pressure companies with exposure to delayed software or infrastructure purchases, while lifting shares tied more directly to security demand.

For investors following the sector, Tuesday’s rally was less about one company’s product launch and more about budget signals. Corporate technology buyers appear to be weighing AI infrastructure, software needs and cyber protection at the same time, and Krishna’s comments put cybersecurity near the center of that conversation.

This story draws on original reporting from CNBC.