Cybersecurity stocks are down on Wednesday, but analysts see this as a buying opportunity. Palo Alto Networks dropped 4.2% and CrowdStrike fell 3.3% in premarket trading after Zscaler gave weaker sales guidance, which affected the whole sector. Wall Street thinks this selloff is a misunderstanding, and here’s what it could mean for investors before both companies report earnings next week.
Zscaler fell 24% in premarket trading after its earnings report and weak outlook disappointed investors. This drop affected the whole cybersecurity sector, even though Palo Alto and CrowdStrike have not released any news. Both companies will report their earnings next week.
Wedbush’s technology analyst pushed back directly on the read-through, arguing that Zscaler’s guidance shortfall reflects company-specific execution issues rather than any deterioration in broader cybersecurity demand. The distinction matters. Zscaler’s challenges are not a sector-wide signal.
Investors often worry that AI could make current cybersecurity products outdated. However, Wedbush’s recent research suggests otherwise. Eight out of ten customers they surveyed think that established cybersecurity companies with strong products and AI plans will succeed as AI grows. Wedbush also called AI the biggest growth driver for the cybersecurity industry in the last twenty years.
For investors interested in Palo Alto and CrowdStrike, Wednesday’s decline offers a chance to buy at a lower price before their earnings reports. Wedbush expects these reports to show a much different picture than Zscaler’s.
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