Mythos rejuvenated cybersecurity. Earnings put the rally to the test

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Chief executive officer at Palo Alto Networks Inc., Nikesh Arora attends the 9th edition of the VivaTech trade show at the Parc des Expositions de la Porte de Versailles on June 11, 2025, in Paris.

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Anthropic’s Mythos model offered a much-needed lifeline to cybersecurity firms in the age of artificial intelligence.

Yet, this week’s cybersecurity earnings offered a brutal reminder that even with tailwinds, sometimes good just isn’t good enough as shares of CrowdStrike and Palo Alto Networks lost 8% and 3%, respectively.

“People probably got a little over their skis,” said Joseph Gallo, a software analyst at Jefferies. “Both gave accelerating guides, but at the end of the day … a lot of these AI benefits take time, and this is a multi-year process.”

Cybersecurity stocks sold off early in the year as concerns that new AI tools, capable of building apps at lightning speed, would upend their business models and, by association, every software firm.

The introduction of Mythos, a model deemed too powerful to release because it could be easily used to exploit software vulnerabilities, renewed enthusiasm for the sector, boosting shares of CrowdStrike and Palo Alto Networks more than 70% each between April and the end of May.

Both companies were early partners in Anthropic’s exclusive Project Glasswing testing program, which the AI lab expanded to 150 additional partners this week, including Rubrik and Tenable.

This quarter’s earnings marked the first major test for that Mythos-driven rally, and upbeat results and aggressively optimistic AI commentary from both cyber giants weren’t enough for investors demanding immediate signs of an AI windfall.

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Palo Alto Networks and Crowdstrike year-to-date stock chart.

The concept of good not being enough is no new phenomenon on Wall Street. Even AI darling Nvidia has succumbed to this phenomenon after failing to meet lofty estimates.

Investors headed into earnings with a similar…

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