The AI boom has been a gift to the cybersecurity industry, driving a wave of spending as companies scramble to defend against a new generation of threats. Two of the biggest beneficiaries, Palo Alto Networks Inc. (NASDAQ: PANW) and Zscaler Inc. (NASDAQ: ZS), both reported earnings this week, offering a rare chance to weigh the sector's heavyweights side by side.
Curiously, both comfortably beat revenue and earnings expectations, yet both shares slipped afterward. Palo Alto had already rallied sharply from its February low heading into its report. Still, even a solid beat couldn't stop the stock from falling sharply, a classic case of lofty expectations proving too hard to satisfy. Zscaler, earlier in its own recovery after a punishing slide, edged lower too, with the beat obviously not being convincing enough.
