Investors recognized artificial intelligence's (AI) potential to transform industries, supercharging many tech stocks in recent years. That enthusiasm shifted to alarm in 2026.
AI's transformational potential includes agentic AI that can independently execute tasks previously handled by software-as-a-service (SaaS) companies, leading to a massive sell-off in SaaS stocks. This "SaaSpocalypse" extended to the cybersecurity sector after AI giant Anthropic released artificial intelligence capable of identifying security vulnerabilities in software.
While Wall Street believes AI threatens cybersecurity companies, the reality is not so simple. Moreover, the current sell-off offers long-term investors an opportunity to buy cybersecurity stocks at substantial discounts.
Image source: Getty Images.
Why AI cannot replace cybersecurity companies
First, let's address Wall Street's AI fears. Although artificial intelligence is a potent technology, it's not a blanket replacement for cybersecurity, which has become critical to functioning in today's digital age. Organizations are unlikely to dump existing solutions for unproven AI alternatives from the likes of Anthropic.
In addition, AI alone isn't a panacea against criminal hackers, who are launching increasingly sophisticated attacks such as data poisoning. This is where the AI that depends on the data to do its job is corrupted, creating vulnerabilities for hackers to exploit.
Consequently, the multi-pronged protection provided by cybersecurity companies is essential. Also, they can address situations AI cannot solve, such as strategic decision-making and weighing ethical considerations.
Cybersecurity stocks to consider buying
The SaaSpocalypse caused many cybersecurity stocks to appear oversold. Some successful companies in the sector to invest in include identity security expert Okta (OKTA 2.65%), data protection provider Rubrik (RBRK 0.27%), and Palo Alto Networks (PANW +2.81%), one of the select businesses given exclusive access to Anthropic's latest AI, deemed too great a cybersecurity threat to release to the public.
NASDAQ: PANW
Key Data Points
Each of these businesses saw substantial share price declines of 15% or more this year through the week ending April 10. Consequently, their stocks are at valuations not seen in years. Since Rubrik isn't profitable, here's a look at its price-to-sales ratios.
Data by YCharts.
Along with their stocks trading at appealing valuations, these companies are all posting strong sales. In its fiscal second quarter (ended Jan. 31), Palo Alto Networks' revenue rose 15% year over year to $2.6 billion. Okta experienced 11% year-over-year sales growth to $761 million in its fiscal Q4, ended Jan. 31.
Rubrik boasted the biggest sales increase among this trio, with an impressive 46% year-over-year growth to $377.7 million in its fiscal Q4, ended Jan. 31. While Rubrik isn't profitable, its Q4 net loss of $87 million is a reduction from the prior year's loss of $115 million, which is a positive sign.
NYSE: RBRK
Key Data Points
Why are these companies resilient?
These three cybersecurity companies possess strengths in the AI era. Palo Alto Networks offers comprehensive protection through its feature-rich platform. Okta's specialty is identity and access management, ensuring that only authorized users have access to an organization's systems, and that protection extends to validating legitimate AI agents.
NASDAQ: OKTA
Key Data Points
Data integrity is the bedrock of AI systems. This makes Rubrik's offerings increasingly important to artificial intelligence adoption.
For investors willing to buy and hold for the long haul, these three are among the successful cybersecurity businesses to consider investing in amid the SaaSpocalypse.
