Shares of cybersecurity companies have surged since April 10, driven by concerns that advanced AI models pose new cyber threats. A Goldman Sachs basket of cybersecurity stocks has more than doubled, with CrowdStrike Holdings Inc., Palo Alto Networks Inc., and Fortinet Inc. each up over 130%. These gains have pushed valuations to extreme levels, with CrowdStrike trading at over 170 times estimated earnings—second only to Tesla Inc. in the S&P 500.

Palo Alto Networks is valued at 91 times projected profit, while Fortinet trades at 48 times. Despite strong demand, some analysts warn the sector may be overvalued. Bernstein’s Peter Weed cautioned that current prices assume growth rates rivaling hyperscaler compute, though practical constraints like customer headcount may limit expansion.

Still, recent earnings from CrowdStrike, which beat forecasts and jumped over 20% in late August, suggest momentum remains strong. CEO George Kurtz noted that AI adoption has created the largest security market opportunity in history. Recent AI-related breaches, including incidents involving OpenAI and Google’s Gemini model, have reinforced investor confidence in the sector’s long-term prospects.