Morgan Stanley flags $45B hidden cybersecurity opportunity

Artificial intelligence-driven panic erased astir $300 cardinal of marketplace worth connected Feb. 3 crossed the bundle industry, according to Forbes.

Cybersecurity stocks person besides been caught up successful the aforesaid sell-off, and Morgan Stanley expert Meta Marshall thinks this is the cleanable clip for investors to recognize that AI is simply a tailwind for cybersecurity, and that the marketplace is poised for immense growth.

She said AI expands the onslaught aboveground and improves the onslaught vectors.

The larger onslaught aboveground is caused by the usage of AI to constitute code, by moving LLMs, and by agents. LLMs are susceptible to punctual injection attacks and tin leak proprietary information. AI-generated codification often introduces information vulnerabilities. AI enhances hackers' violative capabilities by enabling precocious phishing, punctual injection, and information poisoning.

• Protect against AI-based attacks

• Protect AI usage

• Use AI for security
  Source: Morgan Stanley expert Meta Marshall

“With 14% of organizations already reporting an AI breach and 16% noting their breaches utilized AI, this has go an urgent walk priority," Marshall wrote successful her enactment shared with me. "If information walk strength yet matches IT walk intensity, AI information could go a $45bn+ market successful [the] coming years, from ~$16bn today, a 30-40% CAGR.”

Last year, it truly felt arsenic if the attacks were becoming much communal and effective. I wrote astir the biggest ones successful my nonfiction “5 things you should cognize astir cyberattacks successful 2025.”

Marshall said she is astir affirmative connected CrowdStrike (CRWD), owed to the fewer mergers and acquisitions oregon representation overhang. She reiterated an equal-weight (hold) standing for CrowdStrike and a $537 terms target.

CrowdStrike is down 8.35% twelvemonth to date, astatine $429.64, astatine the clip of penning Saturday morning, Feb. 14. The upside is adjacent to 25%. The institution volition study net connected March 3.

Analyst’s adjacent prime is Palo Alto Networks (PANW). She said she is optimistic astir the company, peculiarly present that it has completed acquisitions of Chronosphere and CyberArk. She reiterated an overweight (buy) standing for Palo Alto Networks and the terms people of $245.

Palo Alto Networks is down 9.36% twelvemonth to date, astatine $166.95. The upside is adjacent to 47%. The institution volition study net connected February 17.

While large players CRWD and PANW could beryllium seen arsenic evident choices, Marshall turned her attraction to the stocks for which she sees “checks continuing to beryllium positive.”