AI Enthusiasm Fizzles—CrowdStrike and Palo Alto Stocks Dive 8% and 3%
By John Nada·Jun 6, 2026·2 min read
AI enthusiasm hit a snag as CrowdStrike and Palo Alto shares dropped sharply post-earnings, casting doubt on immediate AI payoffs.
"People probably got a little over their skis," said Joseph Gallo, a software analyst at Jefferies, describing the overzealous market sentiment that had investors betting on swift AI-induced profits in the cybersecurity sector.
The backdrop? Anthropic's Mythos model had earlier rejuvenated hopes, offering an innovative edge in the face of AI-driven threats. Shares in cybersecurity firms like CrowdStrike and Palo Alto Networks soared over 70% between April and May. Yet, with the latest earnings report, reality struck hard. Prices slumped—8% for CrowdStrike, 3% for Palo Alto—underscoring that optimism alone can't sustain market momentum, CNBC Business reported.
This week's earnings were the first true test of the Mythos rally. Despite both companies posting promising numbers and sharing bullish AI narratives, investors were left unsatisfied. Gallo noted the disconnect, highlighting that the tangible benefits of AI integration could take months or even years to materialize.
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Nikesh Arora, Palo Alto Networks' CEO, emphasized the growing demand in what he called the "Mythos era." 1,200 companies expressed interest in AI strategies, with Palo Alto conducting over 800 meetings recently. But Arora was quick to temper expectations, advising analysts against anticipating an immediate windfall. "There's a process, a mechanism... there's execution and deployment," he said.
CrowdStrike CEO George Kurtz echoed this sentiment, projecting significant potential in AI detection and response (AIDR). But he candidly addressed the timeline, describing it as being in the "early innings" of growth.
Enterprises are notorious for their lengthy sales cycles, often spanning nine to 12 months. As Gallo pointed out, the fourth quarter typically sees the strongest purchasing activity as businesses reset their budgets. Thus, expecting instant results from recent AI launches seems premature.
The lesson? While AI offers transformative potential, Wall Street's appetite for immediate, blockbuster results overlooks the longer game. Arora and Kurtz have staked their companies' futures on AI's incremental growth, not an overnight revolution.