KeyBanc downgraded CrowdStrike to Sector Weight, citing concerns that enterprise security budgets will lag overall IT spending in 2026. While the firm acknowledges CrowdStrike’s strong positioning in AI workload security and consolidation potential, it prefers to wait for clearer evidence of budget growth or a narrower valuation gap. According to KeyBanc, CIO surveys suggest only modest gains in cybersecurity allocations next year.

AI’s impact on security vendors remains uneven, and opportunities from tool consolidation are diminishing as enterprises have already streamlined platforms. The brokerage sees better prospects in data and analytics software, driven by cloud migration and AI inference workloads. KeyBanc highlighted Datadog, Dynatrace, Okta, and Snowflake as preferred picks, citing stronger AI narratives and product execution.

Observability emerged as a key theme, with Datadog and Dynatrace well positioned to benefit from increased monitoring of AI-driven applications.