Key Takeaways
- Major cybersecurity equities experienced steep declines Friday following reports about Anthropic’s advanced AI model Mythos
- The iShares Cybersecurity ETF (IHAK) declined 4.5% amid sector-wide selling pressure
- Leading names CrowdStrike, Palo Alto Networks, and Zscaler shed approximately 6%; Tenable posted the steepest loss at 9%
- The selloff came shortly after Morgan Stanley highlighted several cybersecurity companies as preferred investments
- AI-driven disruption concerns have weighed on the sector throughout the current year
Shares of cybersecurity companies tumbled Friday in response to a Fortune report detailing Anthropic’s testing of Mythos, a sophisticated new AI model. According to the report, which referenced a publicly available draft post, Mythos represents Anthropic’s most advanced offering to date, featuring enhanced cyber capabilities that present notable security implications.
The company indicated plans for a gradual deployment strategy due to these security considerations. Anthropic had not provided immediate commentary to CNBC’s inquiry at the time of reporting.
Market participants responded decisively to the news. The iShares Cybersecurity ETF (IHAK) registered a 4.5% decline during Friday’s session. CrowdStrike (CRWD), Palo Alto Networks (PANW), and Zscaler (ZS) each posted losses in the 6% range. SentinelOne (S) dropped 6%, whereas Okta and Netskope suffered declines exceeding 7%. Tenable (TENB) topped the losers list with a 9% retreat.
The sector has encountered similar challenges from Anthropic developments before. In the previous month, cybersecurity equities experienced selling pressure following Anthropic’s introduction of a code-scanning security capability within Claude. Both incidents share a common underlying worry: offensive AI capabilities place increased demands on defensive measures.
Anthropoc revealed in November that a Chinese state-affiliated entity had leveraged Claude to streamline cyberattack operations.
Individual Company Performance
CrowdStrike (CRWD) registered approximately 6% losses during Friday’s trading. Morgan Stanley had recently elevated the company to top-pick status, emphasizing its exclusive telemetry data and kernel-level monitoring as strategic advantages. The organization unveiled the Charlotte AI AgentWorks Ecosystem through collaborations with AWS and NVIDIA, while deepening its Intel partnership to enhance the Falcon platform for AI-powered personal computers.
CrowdStrike Holdings, Inc., CRWD
Palo Alto Networks (PANW) similarly declined roughly 6%. Morgan Stanley considers the company favorably positioned amid the AI security transition. Its Prisma AIRS solution for safeguarding AI agent operations has attracted over 100 initial adopters, while the XSIAM offering serves more than 600 clients with net revenue retention exceeding 120%. Recent product launches include a new Prisma Browser and an automated digital certificate management system.
Zscaler (ZS) experienced a comparable 6% decline. The stock participated in the wider cybersecurity downturn but received no specific analyst attention in Morgan Stanley’s coverage.
SentinelOne (S) retreated 6%. Morgan Stanley maintains an Equal-weight stance on the shares. Company executives emphasized kernel-level telemetry as a distinguishing factor and referenced strengthening pipeline activity as evidence of potential growth reacceleration. The FY27 guidance midpoint targets approximately 20% revenue expansion. Recent corporate developments include an enhanced multi-year agreement with Google Cloud and the appointment of Barry Padgett to the roles of president and COO.
Okta (OKTA) suffered losses surpassing 7%, representing one of the day’s more significant declines. The identity security segment faces particular vulnerability to concerns regarding AI-facilitated credential compromise.
Tenable (TENB) headed sector losses with a 9% drop, absent any company-specific news catalyst.
Morgan Stanley’s Recommendations — Timing and Context
Morgan Stanley had recently detailed its favored cybersecurity investments following executive meetings and observations from the RSA Conference. The firm spotlighted Microsoft (MSFT) for its Security Copilot capabilities and approximately $20 billion annual security revenue, alongside SailPoint for its identity security relevance in the agentic AI landscape.
The sequence of events highlights the rapid nature of sentiment changes within this sector.
The iShares Cybersecurity ETF (IHAK) shows negative year-to-date performance, pressured by persistent concerns about AI-driven disruption throughout the broader software industry.
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