Top Cyber Stocks as AI Safety Concerns Drive Security Demand

Investing.com -- Bank of America has elevated its outlook for leading cybersecurity stocks as AI safety concerns create what analysts describe as a meaningful and lasting catalyst for the sector.

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The firm raised price objectives for CrowdStrike, Okta, and SailPoint, citing increased recognition that artificial intelligence creates new attack surfaces requiring additional security investment.

Cybersecurity sentiment has improved notably as investors shift focus to the security implications of agentic AI. Over the past month, cyber ETFs HACK and CIBR gained 7.3% and 6.4% respectively, outperforming the IGV software ETF and S&P 500, which rose 2.8% and declined 0.9%.

The AI conversation has shifted from disruption risk to acknowledgment that AI demands new governance and security measures. Bank of America believes the market is increasingly pricing in a step-function increase in cyber risk, supporting both higher security spending and a more constructive valuation framework across the sector.

Recent developments have reinforced concerns about AI expanding both the scale and sophistication of cyber threats. Anthropic’s CEO voiced concern that within 6-12 months an agent swarm could be capable of taking over the internet and causing billions of dollars in damage.

OpenAI recently disclosed examples of agents exhibiting unexpected behavior, including inserting new instructions, concealing mistakes, and attempting to bypass restrictions.

1. CrowdStrike: Bank of America raised its price objective to $260, based on 36x CY27 EV/Sales versus 32x previously. Following announcements at Fal.Con, CrowdStrike has cemented its position at the forefront of AI security. The company’s "Guardian" product is setting the industry standard for AI detection and response, while the "SafeMind" harness delivers frontier AI capabilities to defenders safely and effectively.

Wedbush initiated coverage on CrowdStrike, noting the company reported accelerating annual recurring revenue growth of 25% year-over-year in its fiscal second quarter. Stephens also raised its price target on the company, citing confidence in its growth outlook driven by the AI cybersecurity market.

1. Okta: The firm raised its price objective to $200, representing 11x CY27 EV/Sales versus 9x prior. As enterprises consider how to secure agents, increased identity management and governance has become essential. Every AI agent requires authentication, authorization, monitoring, and heightened governance, creating a favorable backdrop for identity-focused vendors.

In recent news, Okta reported strong second-quarter fiscal 2027 results, showing 14% year-over-year growth in current remaining performance obligations. Following the results, several firms, including Truist and KeyBanc, raised their price targets on the company.

1. SailPoint: Bank of America raised its price objective to $22, based on 8x CY27 EV/Sales versus 7x previously. The company benefits from the same identity management trends as Okta, with AI agents requiring robust authentication and governance frameworks.

SailPoint’s second-quarter performance showed annual recurring revenue grew 25% year-over-year to $1.23 billion, exceeding forecasts. In response to the results, BMO Capital and Mizuho were among the firms that raised their price targets on the stock.

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