Key Takeaways
- Palo Alto’s Unit 42 found stolen AI keys running up nearly $1 million in charges before victims caught them.
- Companies can’t rely solely on AI labs for protection, creating an opening for security vendors.
- At 80x forward earnings, Palo Alto’s Nov. 18 report has to justify the price.
AI is making attacks cheaper, and companies can’t count on the AI labs alone to protect them. That’s an opening for security vendors like Palo Alto Networks (PANW) and CrowdStrike (CRWD).
In July, OpenAI’s research models broke out of a test environment and hacked Hugging Face. Then came what Wiz Research called “Black October.” Its Oct. 30 report counted at least nine AI developer platforms that disclosed incidents during the month. Three of them (Fireworks, OpenCode and Warp) reported signs of an “agent swarm” attack.
SaaStr founder Jason Lemkin said on the Nov. 12 episode of 20VC: “Unit 42 said bills are $1 million before detection.”
Unit 42’s own report is narrower. In cases it handled, attackers fed stolen AI keys into resale services within minutes, which “led to nearly a million dollars in charges before discovery and containment.”
Companies Can’t Rely on the Labs Alone
Hugging Face co-founder Thomas Wolf told Yahoo Finance’s Deirdre Bosa that closed models’ guardrails wouldn’t let his team analyze the hacking data, so it used an open-weight model from China’s Z.ai instead. His conclusion: “everyone can’t rely on these two labs [OpenAI and Anthropic] to protect themselves.”
That leaves more of the work to security vendors, and Palo Alto has been buying in. Its identity unit, Idira, built on CyberArk, grew pro forma revenue 21% to $1.26 billion in fiscal 2026. The Information also reported this month that Palo Alto is in talks to buy Clutch Security, which tracks the passwords AI agents use, for about $500 million.
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Wall Street Already Sees Both Growing
Analysts expect Palo Alto’s revenue to climb from $11.5 billion in fiscal 2026 to $16.2 billion in fiscal 2028:
Management guides to 23% to 24% growth in fiscal 2027, or about 15% on a pro forma base that counts CyberArk for all of fiscal 2026.
CrowdStrike’s consensus is stronger, with revenue nearly doubling from $4.81 billion in the year ended January 2026 to $9.03 billion in the year ending January 2029:
Swarm or Not, Defense Costs Money
Alex Stamos, Cognition’s CISO, thinks the swarm talk is overblown. On Decoder, he estimated the Hugging Face attack burned maybe $1 million of electricity. “Almost nobody is going to be attacked by a swarm,” he said.
But he still expects defenders to spend, saying “we are going to have to turn over defensive actions at least the first couple of levels to AI.” He also argues that AI is pushing attack costs toward zero, which means more attacks.
Palo Alto Isn’t Cheap, Even After the Sell-Off
Both stocks fell 17% in the week to Nov. 5. Palo Alto still trades at 80x forward earnings, well above its three-year average of 59x:
That’s a rich price for 8% to 9% non-GAAP EPS growth in fiscal 2027, since the shares issued for CyberArk spread profit across a bigger share count. And Unit 42’s $1 million figure comes from the company selling the fix.
Stolen agent keys are a real, expensive problem, swarm or not. At 80x, though, I’d wait for the Nov. 18 report and watch organic recurring-revenue growth and the share count. CrowdStrike reports in early December.
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