What Happened?
A number of stocks fell in the afternoon session after the cybersecurity sector sold off amid renewed concerns about competition from artificial-intelligence models.
The drop across the industry came after a report revealed that AI company Anthropic was developing a new model called "Claude Mythos." This new model reportedly showed dramatically higher scores on cybersecurity tests. Investors feared the AI model could become so effective at detecting threats that it might reduce demand for traditional cybersecurity services. The broader market also plunged during the session due to geopolitical uncertainty, adding to the negative sentiment.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Endpoint Security company CrowdStrike (NASDAQ: CRWD) fell 6%. Is now the time to buy CrowdStrike? Access our full analysis report here, it’s free.
- Network Security company Zscaler (NASDAQ: ZS) fell 5.6%. Is now the time to buy Zscaler? Access our full analysis report here, it’s free.
- Endpoint Security company SentinelOne (NYSE: S) fell 5.6%. Is now the time to buy SentinelOne? Access our full analysis report here, it’s free.
Zooming In On CrowdStrike (CRWD)
CrowdStrike’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 10.6% on the news that the company announced ambitious long-term revenue targets and new artificial intelligence initiatives during its investor briefing.
At its Fal.Con 2025 conference, the company set a goal to reach $20 billion in Annual Recurring Revenue (ARR), a measure of high-quality, predictable revenue, by fiscal year 2036. CrowdStrike also provided strong guidance for fiscal year 2027, projecting over 20% growth in net new ARR, which easily beat analysts' expectations of 14% growth. To bolster its strategy of securing the AI revolution, the company revealed its acquisition of Pangea, a firm specializing in AI security. Additionally, CrowdStrike unveiled a new AI-driven feature called Risk-based Patching. These announcements signaled a strong commitment to growth and innovation, which resonated well with investors.
CrowdStrike is down 18.7% since the beginning of the year, and at $368.69 per share, it is trading 33.9% below its 52-week high of $557.53 from November 2025. Despite the year-to-date decline, investors who bought $1,000 worth of CrowdStrike’s shares 5 years ago would now be looking at an investment worth $2,121.
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