Palo Alto Networks Inc. (NASDAQ: PANW) sees a USD$1-trillion opportunity as artificial intelligence forces businesses to rebuild aging cybersecurity infrastructure and creates a vast market for security providers.
CEO Nikesh Arora said Tuesday that existing defences cannot respond effectively to automated attacks operating at machine speed. Many companies installed their current security systems seven to 10 years ago, before generative AI transformed the threat landscape across their operations. Consequently, businesses must reconsider their entire cybersecurity architecture rather than simply add another defensive product, he told CNBC.
Arora said companies cannot safely deploy AI tools without first strengthening the systems that protect their networks and data from fast-moving threats. Cybersecurity systems were typically built to identify attacks and help human teams respond within conventional working timeframes. However, AI can help attackers discover weaknesses, write malicious code and launch operations much faster than people can react without equivalent tools.
Arora estimates that companies worldwide carry approximately USD$1 trillion in cybersecurity debt requiring modernization against automated threats. The figure refers to accumulated spending needed to replace or upgrade outdated security technology, rather than money formally owed. Additionally, he expects that work to expand the industry’s growth prospects over a longer period.
Palo Alto’s latest results suggest that companies have already started increasing their security spending. The company beat fiscal fourth-quarter estimates Tuesday and provided a strong outlook for its new fiscal year. Meanwhile, Palo Alto shares have risen 113 per cent since Anthropic introduced its Mythos AI model on April 7.
Read more: Faulty website documentation could trick artificial intelligence agents into installing malware
Read more: Artificial intelligence signs appear on 35% of webpages published since ChatGPT
Cybersecurity companies have their hands full with AI models
Earlier in 2026, investors feared that increasingly capable AI models could replace traditional cybersecurity products and hurt software providers. Conversely, markets later recognized that attackers could weaponize the same technology, increasing demand for stronger and faster defences. Palo Alto and cybersecurity peer CrowdStrike Holdings Inc. (NASDAQ: CRWD) both form part of CNBC commentator Jim Cramer’s charitable portfolio.
Arora described Anthropic’s Mythos release as a turning point in how corporate leaders viewed AI-related security risks. In addition, he said the model quickly convinced customers that existing defences could not adequately protect them from AI-assisted attacks today. That shift produced more requests for customer meetings and helped reverse negative investor sentiment toward cybersecurity stocks.
The Frontier AI Critical Defense Program was formally introduced by Palo Alto in August to help companies test and modernize their defences. The program uses advanced AI models to search for vulnerabilities and assess whether existing security tools can withstand automated attacks. Furthermore, Arora said Palo Alto has discussed the initiative with approximately 2,000 companies.
Those discussions do not mean that customers will replace all their aging technology immediately. Also, Arora cautioned that the estimated spending opportunity will unfold gradually rather than arrive during the next quarter. He expects AI adoption to extend both the cybersecurity industry’s growth rate and the period over which companies invest.
.
