Trillion-dollar old infrastructure faces elimination! Palo Alto (PANW.US) CEO claims: AI is not a catastrophe, but an extraordinary feast

Zhitong Finance APP reports that Nikesh Arora, CEO of cybersecurity company Palo Alto Networks (PANW.US), said on Tuesday that artificial intelligence is forcing major enterprises to completely overhaul their outdated cybersecurity infrastructure, valued at around 1 trillion USD and built during the pre-AI era.

Arora stated on the program: "Any facility deployed seven or ten years ago cannot cope with, nor is it prepared to process AI at machine speed. You have to re-examine your network architecture."

The earnings report Palo Alto released on Tuesday shows that this sense of urgency is already translating into business results. The company’s fourth-quarter results exceeded expectations and it issued a strong outlook for its new fiscal year.

Arora expects that as AI enables attackers to identify and exploit vulnerabilities faster than ever before, forcing major enterprises to upgrade security defenses not designed for automated threats, this market opportunity will continue to expand. “If you can’t do cybersecurity well, you can’t successfully deploy AI,” he said.

“Globally, there is about 1 trillion USD of cybersecurity debt that must be modernized to withstand automated threats, because these threats occur in an instant,” Arora stated during Palo Alto’s earnings call.

This opportunity marks a dramatic reversal in investors’ perceptions earlier this year of AI’s impact on cybersecurity. Previously, concerns that increasingly powerful AI models could disrupt traditional security software put pressure on Palo Alto and other cybersecurity stocks. Ultimately, as investors realized attackers could also weaponize this technology, the market began to view AI as a driver of growth.

“Nine months ago... we were convicted and almost given a death sentence, because at that time people thought AI would steal our lunch, breakfast, and dinner,” Arora said. “Now it seems that’s not the case. It looks like we’re actually going to have to join them at the feast.”

Arora pointed out that the emergence of Anthropic’s Mythos model earlier this year was a turning point. Mythos prompted major enterprises to take cybersecurity more seriously, as the model could be easily used to exploit software vulnerabilities. Since April 7, Palo Alto’s stock price has soared 113%. Before that point, the stock had been losing value throughout 2026.

“For eight years I’ve been trying to tell customers they weren’t ready, and all it took was Anthropic releasing Mythos for that message to get across,” Arora said.

Arora stated that Palo Alto has discussed its “Frontier AI Critical Defense Program” with about 2,000 companies. The program uses advanced AI models to test customers’ defense capabilities, identify vulnerabilities, and help them modernize their security infrastructure. The company officially launched this initiative in August.

Although Arora warned that this spending won’t happen all at once, he said AI has fundamentally expanded the size and duration of the market opportunity for the cybersecurity industry.

“Not everything will happen next quarter,” Arora said, “but what I can say is this has changed the long-term growth rate and duration of cybersecurity—not only for Palo Alto, but for the entire industry.”