Source: Zhittong Finance And Economics APP. KeyBanc Capital Markets, a well-known Wall Street investment firm, has lowered revenue expectations for some cybersecurity giants before the U.S. cybersecurity financial reporting season. This is mainly because a new survey shows that large-scale projects related to generative artificial intelligence are taking up most of the overall IT budget of many companies. In KeyBanc's view, this trend may lead companies to shift all IT expenditures to large generative AI projects to improve business operations and increase financial predictability, which may slightly reduce budgets for cybersecurity.

According to KeyBanc's research report: "Our survey results for the IT VAR in Q2 2024 show that the challenges this quarter are similar to those in Q1, or even slightly greater than those in Q1." "The overall IT budget outlook for enterprises in 2024 has slowed from 2.6% in our previous survey to 1.6%. 39% of respondents said that the macroeconomy has rapidly deteriorated in the past 90 days (our previous survey showed 27%), and the time for IT spending expectations to rebound significantly has been postponed once again."

KeyBanc's research report also shows that up to 42% of the surveyed companies believe that large-scale gen-AI related project plans are squeezing enterprise IT budgets, greatly affecting back-end, public cloud, and cybersecurity expenditures.

This latest survey result has led KeyBanc to slightly lower revenue expectations for some cybersecurity giants. For example, the firm's latest quarterly revenue estimate for Fortinet (FTNT.US) has been lowered from $1.405 billion to $1.404 billion, and revenue expectations for Check Point Software Technologies (CHKP.US) have been reduced from $0.622 billion to $0.621 billion.

KeyBanc also slightly lowered revenue expectations for the popular investment targets of the U.S. cybersecurity sector, CrowdStrike Holdings (CRWD.US), from $0.96 billion to $0.959 billion. The firm has lowered its 12-month target price for CrowdStrike from $440 to $420, but the target price is still significantly higher than the closing price of $354.94 on Wednesday.

Although KeyBanc's overall revenue expectations for SentinelOne (S.US) remain unchanged at $0.197 billion, its net new ARR is expected to drop from $40 million to $39 million.

Meanwhile, the firm's overall revenue expectations for Palo Alto Networks (PANW.US), the global leader in the cybersecurity field, have been slightly revised downwards from $2.165 billion to $2.157 billion, but its 12-month target price remains at $380, higher than Wednesday's closing price of $332.140.

One of the few cybersecurity giants benefiting from KeyBanc's survey results is Arista Networks (ANET.US), whose upcoming quarterly revenue expectations have been raised from $1.645 billion to $1.657 billion. The main logic is that the company's comprehensive layout in Ethernet and data center network design is expected to benefit greatly from the continued acceleration of global AI infrastructure construction, relative to other companies focusing solely on the cybersecurity field. At the same time, KeyBanc has greatly raised Arista Networks' target stock price from $349 to $432.

With gen-AI support, cybersecurity companies such as CrowdStrike are becoming more likely to outperform expectations.

From another relatively bullish perspective, KeyBanc's downward revision of revenue expectations for these cybersecurity giants means that the threshold for exceeding institutional expectations on their Q2 financial reports is also being lowered. Therefore, as long as the gap between expectation and performance exists, their recent lackluster stock prices may potentially receive a boost. This is because the downward adjustment of performance targets makes it easier to exceed them, and companies can achieve significant stock price rebounds with only slight outperformance under the boost of "expectation gap".

Under the epic wave of global enterprise layout of AI technology, cybersecurity giants in the U.S. securities market are also focusing their efforts on combining generative AI technology with cybersecurity technology, which may be one of the core driving forces behind increasing subscriptions to cybersecurity services by companies.

Under the new generative AI technology, cybersecurity services have both unparalleled convenience brought about by low technical thresholds, as well as an exponential increase in cybersecurity service efficiency brought about by AI technology. These two points are very attractive to companies that are developing AI software applications. Developing AI software applications cannot be achieved without the support of massive AI models and enterprise-level big data, and focusing on "AI + cybersecurity services" with low technical operation thresholds and high efficiency will undoubtedly provide stronger cybersecurity services for these two core technologies.

According to statistics, after soaring by over 140% in 2023, the stock price of CrowdStrike, one of the "AI bull stocks" in the U.S., has risen by as much as 40% year-to-date this year, mainly because investors expect global enterprises to continue to invest in cybersecurity and expect CrowdStrike's valuation to rise with the continued surge of global AI investment in incorporating AI technology into cybersecurity.

CrowdStrike is striving to fully integrate breakthrough generative AI technology into its cybersecurity platform services, particularly through the introduction of an AI security analyst named "Charlotte." This feature aims to empower every user of the CrowdStrike Falcon platform to quickly create workflows based on AI assistance. By asking questions and interacting with Charlotte, the virtual AI analyst, users can easily and conveniently mobilize the major core modules with low-threshold operations and real-time understanding of real-time cybersecurity vulnerabilities, threat factors, and other security issues, significantly enhancing the platform's effectiveness and user experience.

The multi-modal architecture behind Charlotte AI continues to learn and optimize rapidly from high-fidelity security data, threat intelligence, and expert annotated security events, providing fast and accurate answers. With functions such as promptbooks and command-line analysis, Charlotte AI can greatly accelerate the operation of the security operations center (SOC), efficiently helping the cybersecurity platform to make faster and more accurate cybersecurity defense reactions.

CrowdStrike Falcon, launched by CrowdStrike, is a single lightweight agent architecture cybersecurity platform that integrates multiple security markets, including enterprise workload security, hosted security services, security and vulnerability management, IT operations management, threat intelligence services, identity protection, and log management, showcasing its advancedness and leadership in utilizing AI and cloud technology for cybersecurity protection. This platform can be extended in different environments (including cloud, hybrid, and local environments) to meet the ever-changing needs of enterprises. The CrowdStrike Falcon platform is supported by CrowdStrike Security Cloud and advanced AI technology to ensure scalable deployment and effective defense against modern network threats.