Okta skyrockets 20%, CrowdStrike surges 15% as rising AI threat boosts earnings

Okta skyrockets 20% and CrowdStrike surges 15%, leading cyber rally Skip Navigation Markets Business Investing Tech Politics & Policy Video Watchlist Investing Club PRO Livestream Menu Key Points CrowdStrike and Okta popped after beating Wall Street's expectations and lifting guidance due to AI adoptions The rise of advanced but potentially risky AI models has led customers to spend on more cyber tools. Okta CEO Todd McKinnon said Ai tool adoption is is in the "early stages." In this article OKTA CRWD Follow your favorite stocks CREATE FREE ACCOUNT Jonathan Raa | Nurphoto | Getty Images CrowdStrike and Okta shares surged on Thursday after earnings showed that artificial intelligence adoption is pushing customers to spend more on cybersecurity tools. Both companies beat Wall Street's estimates for the fiscal second quarter and raised their forecasts , citing the AI agent threat. CrowdStrike gained 15% while Okta surged 20%. The broader cyber sector rallied as well, with Palo Alto Networks , SailPoint and Rubrik up about 9%. "We're in an arms race," CrowdStrike CEO George Kurtz said during an earnings call with analysts on Wednesday. "AI is driving more cyberattacks. AI is driving more cyber spending. AI is driving a clear divide between the cybersecurity companies that solve problems and those that compound problems." Tune in at 6 p.m. ET for "Mad Money" as Kurtz joins CNBC's Jim Cramer. Watch in real time on CNBC+ or the CNBC Pro stream. The company's flexible Falcon platform offering, which lets customers switch out security tools, doubled year over year, he added. The release of advanced AI models like Anthropic 's Mythos, and attacks such as OpenAI 's Hugging Face hack, have raised the stakes for the cybersecurity sector in recent months, forcing businesses to scale their security stacks to combat mounting attacks orchestrated by AI agents. One clear winner has been identity security tools that help businesses secure and manage the explosion in AI agents. Amid this backdrop, cybersecurity stocks have rocketed to fresh highs, with both CrowdStrike and Okta up more than 80% each. Read more CNBC tech news Meta settles social media addiction case with California, other states for $16.7 billion HP partners with U.S.-blacklisted Huawei for licensing the Chinese company's WiFi tech Amazon service Bezos once called 'artificial artificial intelligence' is shutting down OpenAI data center chief Chris Malone is out, the latest in a string of executive exits Wednesday's earnings marked the unofficial start of the reporting season for the cyber sector, with Palo Alto Networks and Zscaler among the companies set to report next week, Analysts at Deutsche Bank remain "optimistic" about the sector's growth in the AI era, but are waiting on upcoming reports to solidify near-term demand trends. Okta CEO Todd McKinnon touted the company's early success with new products, which accounted for nearly a third of total bookings. "While adoption remains in its early stages, momentum is growing, and those advantages are translated into customer demand reflected in the dozens of AI deals we won in Q2," he said on a Wednesday earnings call. Following the results, analysts at Bank of America upgraded shares to neutral from an underperform rating on accelerating AI growth, but warned of limited upside ahead. "We are increasingly encouraged by Okta's AI opportunity and early customer traction," the firm wrote. "However, adoption remains very early, disclosed metrics remain limited, and management continues to view AI as immaterial to FY27 results." WATCH: Cyber spend will benefit from AI anxiety over the next couple quarters, says Jefferies' Joseph Gallo watch now VIDEO 3:11 03:11 Cyber spend will benefit from AI anxiety over the next couple quarters, says Jefferies' Joseph Gallo The Exchange Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.