Cybersecurity stocks rallied Wednesday after U.S. security agencies warned of a programming language vulnerability. Morgan Stanley's Meta Marshall sees tactical longs in the group, while investors link the sector to continued AI development.
Cybersecurity stocks jumped Wednesday after top U.S. security agencies warned about threats to the internet amid powerful advancements in artificial intelligence capabilities. The Amplify Cybersecurity ETF (HACK) gained 3.2%, and the First Trust NASDAQ Cybersecurity ETF (CIBR) added 2.7%.
Among individual names, Palo Alto Networks rose 7%, CrowdStrike advanced 5.2% and Zscaler climbed 7.8%.
The Wednesday warnings focused on risks to PHP, the programming language used to build large swaths of the internet, including WordPress, Drupal and Magneto websites. The National Security Agency and the Federal Bureau of Investigation posted about the vulnerability, and the agencies recommended immediate fixes to the code.
If fixes were not possible, the agencies advised going offline entirely. Investors also think cybersecurity will become more important as AI develops.
Meta Marshall at Morgan Stanley wrote in a Thursday note that 2027 setups are tricky, but she sees tactical longs in the group. Morgan Stanley holds an overweight rating on Palo Alto Networks with a $410 price target, implying 18% upside from Wednesday's close of $347.25.
Paul Meeks, head of technology research at Freedom Capital Markets, told CNBC that CrowdStrike and Palo Alto Networks should be "a clear beneficiary from continued AI development".
Source: CNBC
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