Cybersecurity shares climb after IBM cites AI-related security spending review

Cybersecurity stocks advanced sharply on Tuesday after IBM Chief Executive Arvind Krishna said clients were reassessing technology spending because of cybersecurity risks tied to fast-developing artificial intelligence. CNBC reported that several listed security software companies rose between roughly 6% and 11% during the session.

The move followed IBM’s preliminary second-quarter update, in which Krishna said customers had shifted spending toward servers and memory while “rapidly-evolving, industry-wide cybersecurity concerns” diverted attention from other purchases. IBM’s update also warned that second-quarter earnings had fallen short of expectations, according to CNBC.

In an interview with CNBC’s Sara Eisen on Tuesday, Krishna said some larger transactions were delayed late in the quarter as companies reconsidered budget allocations. “Mythos is making people pause to say, wait, how much do I need to spend on cyber? They’re pausing on new deals until they know,” Krishna told Eisen. He added: “We don’t see our software being disrupted by AI at all.”

Security names rally

Okta traded up 9.67% at $153.02, according to the CNBC quote data cited in the report. Netskope rose 9.96%, CrowdStrike gained 10.70% and SailPoint advanced 8.78%.

Zscaler climbed 7.30%, SentinelOne rose 5.55% and Palo Alto Networks gained 6.11%, according to the same market data. The gains were broad across companies that sell identity management, endpoint protection, cloud security and network-defense tools.

The stock reaction came after Krishna framed cybersecurity as one of the spending issues commanding boardroom attention. In corporate technology budgets, a reassessment can delay some software contracts while buyers determine whether new risks require different controls, larger security programs or a shift in near-term capital toward infrastructure.

AI model concerns influence budgets

CNBC reported that the rise of advanced AI systems, including Anthropic’s Mythos, has contributed to concern on Wall Street that cyberattacks could become faster and more sophisticated. Krishna’s comments linked those concerns to customer behavior at the end of IBM’s quarter, saying some clients paused decisions until they had more clarity on their cyber needs.

IBM’s reference to higher server and memory spending points to another pressure on technology budgets. Companies building or using AI systems often require more computing capacity, which can draw funds toward hardware and infrastructure even as security teams review how AI changes attack and defense requirements.

The Tuesday rally in cybersecurity shares reflected investor attention to that spending mix. Krishna’s comments did not identify the delayed deals by customer, value or product category, and IBM did not say that cybersecurity vendors would capture the redirected spending. The confirmed development was that IBM saw customers reassessing priorities, with cybersecurity concerns elevated in those discussions, according to the company’s preliminary results and Krishna’s CNBC interview.

This story draws on original reporting from CNBC.