TLDR
- Anthropic launched Claude Code Security, an AI tool that scans code for security flaws, sending cybersecurity stocks sharply lower.
- CrowdStrike fell 11%, Zscaler dropped 10%, and JFrog tumbled 25% in the initial selloff.
- J.P. Morgan called the selloff “indiscriminate” and kept Overweight ratings on all five affected stocks.
- CrowdStrike CEO George Kurtz argued AI increases the need for security, not reduces it.
- By Tuesday premarket, all five stocks were ticking higher as calm returned.
Cybersecurity stocks took a sharp hit this week after Anthropic unveiled Claude Code Security — an AI tool built into its Claude model that scans codebases for vulnerabilities and suggests patches for human review.
The selloff started Friday when the announcement dropped, and continued into Monday. CrowdStrike closed Monday down 9.85%, settling at $350.33. Zscaler fell 10.31%. SailPoint dropped 7.6%, JFrog slid 5.5%, and Palo Alto Networks declined 2.5%. JFrog had already taken a 25% hit on Friday alone.
CrowdStrike Holdings, Inc., CRWD
The fear driving the move is simple: if an AI model can replicate what these companies charge for, the business case for their products weakens.
What Claude Code Security Actually Does
The tool is being released as a limited research preview for Claude enterprise and group customers. It scans source code for security flaws and recommends fixes — but a human still reviews those suggestions before anything is acted on.
Analysts at BTIG were quick to point out that Claude Code Security and JFrog aren’t really competing for the same ground. Claude targets source code; JFrog secures software binaries. “If software is a cake, Claude Code Security perfects the recipe while FROG ensures the ingredients are not poisonous,” they wrote. BTIG kept its Buy rating on JFrog.
Analysts Push Back on the Selloff
J.P. Morgan analyst Brian Essex called the market reaction a “sell first, ask questions later” environment, describing the selloff as “relatively indiscriminate.”
His argument: cybersecurity vendors have real advantages that are hard to replicate — customer trust, proprietary data, and deep technical expertise. They also have access to the same AI tools that potential competitors do. Essex reiterated Overweight ratings on all five stocks.
CrowdStrike CEO George Kurtz made a similar case in a LinkedIn post Sunday. “AI doesn’t eliminate the need for security. It increases it,” he wrote. “If you want to build AI, you need GPUs. If you want to deploy AI, you need security.”
Where CrowdStrike Stands Now
CRWD has dropped 14.12% over the past month, underperforming the S&P 500, which gained 1.75% over the same period.
The stock trades at a forward P/E of 80.07 — well above the industry average of 39.88. CrowdStrike reports earnings on March 3, 2026, with analysts expecting EPS of $1.10, up 6.8% year-over-year, and revenue of $1.3 billion, up 22.48%.
By Tuesday premarket, the panic had cooled. CrowdStrike was up 0.3%, Zscaler up 0.5%, with SailPoint, JFrog, and Palo Alto all ticking higher too.
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