CrowdStrike jumps 5%, Palo Alto and Okta gain 4% on Scotiabank upgrade

Shares of cybersecurity firms rallied Monday after Scotiabank upgraded Okta to Outperform, lifting the sector 4% to 5%.

"AI agents are rapidly becoming a new workforce inside every organization, creating a wave of identities that must be secured and governed alongside human users," Todd McKinnon, chief executive officer at Okta, said.

Scotiabank raised its rating on Okta to Outperform from Sector Perform with a $165 price target, well above the $121 consensus. CrowdStrike Holdings rose 5% to $204, Palo Alto Networks gained 4% to $363, and Okta climbed 4% to $147. The Amplify Cybersecurity ETF advanced 3% to $110.

The upgrades frame identity and endpoint security vendors as core beneficiaries of rising AI-driven cybersecurity spending. CrowdStrike delivered first-quarter revenue of $1.39 billion, up 26% year over year, with total annual recurring revenue reaching $5.51 billion. Palo Alto posted third-quarter revenue of $3 billion, up 31%, with Next-Generation Security ARR climbing 60% to $8.1 billion. Both companies raised full-year guidance on their most recent calls.

Palo Alto Chief Executive Officer Nikesh Arora said customers are turning to the company to secure AI deployments at scale. CrowdStrike CEO George Kurtz described his company as "AI security infrastructure, critical to successful AI adoption."

The gains extend a powerful run for the group. CrowdStrike has surged 76% year to date, while Palo Alto has gained 97%. The valuations reflect strong fundamentals but leave the stocks exposed to momentum reversals if spending expectations shift.

The next catalyst for the sector will come from the coming earnings cycle, where guidance revisions from CrowdStrike, Palo Alto, and Okta could either confirm the AI-security spending narrative or test a group that has already priced in significant upside.

This article is for informational purposes only and does not constitute investment advice.