Why Cybersecurity Stocks Are Making a Huge Comeback in Q2

After a period of underperformance, cybersecurity stocks have made a huge comeback recently. Since the end of Q1, stocks such as CrowdStrike, Palo Alto Networks, and Fortinet have registered gains of more than 50%¹.

So, what’s behind this comeback? And is there further upside in this area of technology?

Project Glasswing was a Game-Changer

There are several reasons that cybersecurity stocks have come roaring back recently. One is that the narrative around this sector has shifted dramatically.

In Q1, cybersecurity stocks were dragged into the software selloff. Amid new product launches from Anthropic, they suffered from heavy selling activity as investors panicked that enterprise buyers would shift their budgets away from traditional security vendors toward generalized AI tools that could automatically scan and patch vulnerabilities.

Recently, however, it has become clear that traditional cybersecurity companies are still going to play a major role in the AI era. One catalyst here was “Project Glasswing”, an initiative bringing together Anthropic, CrowdStrike, Palo Alto Networks, and a number of large-scale enterprises (e.g. Apple, JP Morgan, Amazon) in an effort to secure the world’s most critical software.

As part of Project Glasswing, launch partners will use Anthropic’s Mythos Preview (a powerful AI model capable of identifying high-severity vulnerabilities in operating systems) as part of their defensive security work. This is essentially an acknowledgement that an LLM alone cannot secure an enterprise; to be effective against modern threats, advanced AI must be deeply integrated into the existing infrastructure, real-time telemetry, and massive data footprints of established cybersecurity platforms.

It’s worth noting that since Anthropic released Claude Mythos, US banks² have been scrambling to fix scores of IT system weaknesses flagged by the AI tool. This is prompting urgent repairs and software upgrades.

Ultimately, the launch of Mythos has been a bit of a wake-up call to the banking industry. With cyber risk now moving at machine speed, banks need to be on top of their game when it comes to security.

Earnings Across the Sector Have Been Strong

Another factor behind the rally has been strong earnings across the sector. Results have shown that AI isn’t a competitor to leading cybersecurity vendors, but instead, a powerful accelerator.

Take Fortinet, for example. Its Q1 earnings³, posted on May 6, showed year-over-year revenue growth of 20% with product revenue up 41%.

On the back of this performance, the company raised its revenue guidance for 2026. In its commentary, the company noted that growth was driven by the continued convergence of networking and security, and by an increasingly complex threat environment that is being intensified by AI.

It’s worth pointing out that Fortinet said in its earnings that it is collaborating closely with multiple leading AI companies. These include Anthropic as part of Project Glasswing, OpenAI, and others.

Another cybersecurity stock that has delivered strong earnings recently is Akamai. In its Q1 earnings⁴, it reported 11% growth in security revenue.

Notably, the company reported 40% growth in Cloud Infrastructure Services (CIS) revenue. Here, it announced that a "leading US-based frontier model provider" had committed $1.8 billion over seven years to its cloud infrastructure services.

Do Cybersecurity Stocks Have Further Upside Potential?

As for whether cybersecurity stocks can keep rising, Wall Street analysts believe they can. Recently, firms have been increasing their price targets across the sector.

Take a look at analyst calls on CrowdStrike, for example. In May, it has seen price target⁵ increases from a range of firms with Barclays and Truist going to $650 and KeyBanc going to $700.

In a research note⁶, analysts at KeyBanc said that CrowdStrike is positioned for upside due to Mythos threats, its Frontier AI Readiness service, and its leadership in areas such as continuous threat exposure management (CTEM), virtual machines (VM), patching, cloud security, and services. The firm noted that CrowdStrike has said that demand has been strong since its launched Project Quiltworks (an industry-wide coalition of ecosystem partners designed to assess, prioritize, and continuously remediate the wave of vulnerabilities in production code being discovered by frontier AI models) in April.

Palo Alto Networks is another cybersecurity stock that has seen price target⁷ increases lately. Recently, several firms, including Morgan Stanley, Baird, and Mizuho, have gone to $265 here while a couple of firms have gone to $275.

In a research note⁸, analysts at Morgan Stanley noted that frontier AI is compressing attack timelines and increasing the importance for automated, identity-based detection and response. They believe this backdrop is likely to accelerate spending on cybersecurity solutions.

An ETF Offering Exposure to Cybersecurity Stocks

Those looking for exposure to cybersecurity stocks may wish to explore the Themes Cybersecurity ETF (SPAM). This ETF seeks to track the Solactive Cybersecurity Index (SOCYBERN), which identifies the largest 35 companies by market capitalization in digital security software.

Footnotes:

¹Google Finance, as of May 19, 2026

²Newsfile Refinitiv, Anthropic’s Mythos sends US banks rushing to plug cyber holes, as of May 12, 2026

³FORTINET, Fortinet Reports Strong First Quarter 2026 Financial Results, as of May 6, 2026

⁴Akamai, Akamai Reports First Quarter 2026 Financial Results, as of May 7, 2026

⁵Investing.com, CrowdStrike Holdings Inc (CRWD), as of May 19, 2026

⁶Investing.com, KeyBanc raises CrowdStrike stock price target to $700 on demand, as of May 18, 2026

⁷Investing.com, Palo Alto Networks Inc (PANW), as of May 19, 2026

⁸Investing.com, Morgan Stanley raises Palo Alto Networks price target on identity security expansion, as of May 15, 2026