The current climate, naturally, is one of perpetual digital siege. Threats multiply with a vulgar enthusiasm, and the villains, one gathers, are increasingly reliant on artificial intelligence – a development which, while regrettable, does at least provide a convenient scapegoat when things inevitably go awry. Estimates suggest a 72% surge in AI-enabled attacks by 2025 – a statistic which, while alarming, merely confirms what any sentient observer already suspected. Two-thirds of companies, it seems, are now deploying AI as a countermeasure, a rather desperate attempt to fight fire with, well, more fire.
This, of course, has created a rather lucrative market – projected to reach $377 billion by 2028, according to IDC. A sum large enough to tempt even the most cynical investor. One observes, therefore, a predictable scramble for dominance, and certain players are, shall we say, better positioned than others. We shall consider two: Palo Alto Networks and Microsoft – not necessarily the brightest stars, but certainly amongst the least objectionable.
Palo Alto: Expanding the Perimeter
Palo Alto’s recent acquisition of Cyberark Software for $25 billion is a move of considerable ambition, and expense. One wonders if they consulted an accountant. It expands their footprint in the increasingly vital, and endlessly complex, realm of identity and access control. The price, while substantial, reflects the prevailing hysteria. Once the deal is finalized – and one assumes it will be, given the current climate of irrational exuberance – Palo Alto will be able to offer a rather comprehensive, if rather expensive, solution to its clients.
However, even without this latest extravagance, Palo Alto remains a force to be reckoned with. First quarter sales rose 16% to $2.5 billion, and non-GAAP net income increased by 19% to $0.93 per share – figures which, while hardly spectacular, are at least respectable. They boast an operating margin of approximately 30%, and project an adjusted free-cash-flow margin of 40% or higher by 2028. In short, they are making money, and one suspects they will continue to do so, regardless of the prevailing digital chaos.
Microsoft: Beyond Software and Clouds
Microsoft, of course, is best known for its Azure cloud computing business, its growing influence in artificial intelligence with Copilot, and its ubiquitous Microsoft 365 software. One might be forgiven for overlooking their involvement in cybersecurity, but that would be a mistake. The AI cloud market is estimated to reach $2 trillion globally by 2030 – a sum which, naturally, attracts attention.
However, Microsoft also possesses 1.5 million cybersecurity customers globally. Their Azure Security service allows them to benefit from both hosting clients’ cloud networks and, crucially, securing them. In 2025, they earned an estimated $37 billion in cybersecurity sales, accounting for about 14% of their total sales – making them the largest cybersecurity company by revenue. If they maintain this trajectory, they could reach $50 billion by 2030 – a figure which, while impressive, seems almost quaint given the scale of the threat.
Microsoft’s recent results are, predictably, strong. Revenue climbed 18% year over year to $77.7 billion, and non-GAAP earnings surged 22% to $30.8 billion. By capitalizing on the rapid adoption of AI – and the growing demand for security services that protect AI-driven cloud infrastructure – Microsoft is well positioned to continue rewarding shareholders as it evolves into an increasingly key player in this rather frantic game.
A Word of Caution
All technology stocks are, naturally, prone to volatility. Cybersecurity stocks, however, are particularly susceptible to panic selling following security breaches. No system is infallible, and breaches are, inevitably, a matter of when, not if. Investors should, therefore, avoid excessive sentimentality. As long as Microsoft and Palo Alto address any problems swiftly, and without lasting damage, a measured response is advisable. Panic selling, one suspects, is rarely a sign of good judgment.
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2026-01-22 16:32