Cybersecurity companies are poised to see "durable" demand amid their growing role in enterprise artificial intelligence adoption in the light of rising agentic AI threats, BofA Securities said Tuesday.
Initially, the market saw AI as a "potentially disruptive force that could compress the value of incumbent security platforms," the brokerage said in a note to clients. However, recent developments have moved the conversation toward the growing threat landscape triggered by the technology.
"We believe investors are increasingly viewing cybersecurity as a critical enabler of enterprise AI adoption, supporting both durable demand and a more constructive valuation framework across the sector," BofA analyst Tal Liani said.
Earlier this month, the UK's AI Security Institute said AI agents from Anthropic and OpenAI took unsanctioned actions targeting real people and organizations during cyber testing.
BofA raised its price objective on the SailPoint (SAIL) stock to $19 from $16.
The identity security company is well positioned to gain from the increasing demand for identity governance and administration offerings that help organizations manage access, maintain compliance, and reduce identity-related risk, according to the note.
"While we remain constructive on SailPoint's long-term positioning as identity becomes a foundational layer of AI security, we see some higher execution risk for new products, resulting in a more balanced risk-reward profile relative to peers," Liani said.
For cybersecurity provider SentinelOne (S), BofA raised its price objective to $26 from $22.
"Record net new (annual recurring revenue) growth, improving trends among ($100,000-plus) ARR customers, and continued progress toward balanced growth and profitability reinforce our constructive view," Liani said.
The brokerage increased its price objective on Zscaler's (ZS) stock to $210 from $175.
The cloud security company's strength in network transformation, data protection, and Zero Trust security, along with its growing AI capabilities and extensive cloud platform, bolsters its "strategic importance" within customer environments, Liani said.
BofA reiterated its buy rating on the stocks of SentinelOne and Zscaler and its neural rating for SailPoint.
SailPoint shares were up 4.2% in Tuesday afternoon trade, while SentinelOne rose 2.4%. Zscaler was 1.9% higher.
Price: $19.28, Change: $+0.69, Percent Change: +3.71%
