Cybersecurity stocks came under pressure again on Thursday afternoon after top AI startup OpenAI introduced a new security feature. However, the pullback was more modest this time.
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OpenAI rolled out Advanced Account Security, a new setting for the platform’s ChatGPT AI chatbot and digital assistant that is also available on the Codex AI coding and automation system. The startup noted that the feature is particularly useful for people such as journalists, elected officials, researchers, and political dissidents who are at increased risk of digital attacks.
Cybersecurity Stocks Drop on New OpenAI Security Feature
As of 2:05 p.m. EST shares of the following cybersecurity companies fell as follows:
- Cloudflare (NET) — 3% to $205.62
- Zscaler (ZS) — 3.36% to $130.20
- Palo Alto Networks (PANW) — 1.36% to $179.07
- CrowdStrike Holdings (CRWD) — 1.84% to $444.04
“Advanced Account Security brings together a series of controls that strengthen sign-in protections, tighten account recovery, reduce exposure from compromised sessions, and give users more visibility into account activity,” OpenAI wrote in a blog post.
The startup also announced a partnership with Yubico to provide phishing-resistant authentication using physical security hardware.
A Threat or Opportunity?
The gentle retreat on Thursday follows the sharper sell-off pressure seen earlier in the month after OpenAI rival Anthropic debuted Project Glasswing, a defensive cybersecurity initiative. The project was designed to provide early access to the startup’s Claude Mythos, a powerful AI model that can autonomously identify security vulnerabilities in systems.
Shares of cybersecurity companies occasionally face pressure upon the release of a powerful new AI product, with investors worried AI tools may render traditional cybersecurity software obsolete. However, several analysts have continued to emphasize that traditional cybersecurity companies have an edge in terms of capacity and experience to benefit from rather than be displaced by AI tools.
Which Is the Best Cybersecurity Stock to Buy?
Netskope (NTSK) and Zscaler (ZS) both present the best investment case with Strong Buy consensus ratings, the TipRanks Stock Comparison tool shows. They come with respective average price targets of $17.38 and $228.13 that both roughly imply 75% upside.
