Stocks of multiple cybersecurity companies slid on Monday following the launch of a new security feature by AI startup Anthropic. The feature, named Claude Code Security, is designed to identify high-severity vulnerabilities in open-source software repositories and to propose fixes for those flaws.
Market moves were sizable. Shares of CrowdStrike, Datadog and Zscaler each fell by about 11%. Fortinet and Okta traded down roughly 6% apiece. Palo Alto Networks declined 3%, while SentinelOne slipped 5%.
The downdraft comes amid growing investor concern about the expanding capabilities of AI tools. Software stocks have faced pressure in recent months as markets digest advances in AI, particularly after the introduction of plug-ins for Anthropic’s large language model Claude, which some view as the startup moving toward an application layer.
Not all market participants see the selloff as justified. "What you’re seeing today is really the continuation of a panic-driven, narrative-led selloff," said Shrenik Kothari, director, security and infrastructure analyst at Robert W. Baird. Kothari emphasized limits to the new tool’s scope, noting that Claude Code Security does not handle real-time security tasks such as detecting live intrusions, stopping attacks in progress or managing compiled software components in production - capabilities that other specialized security platforms provide.
Some analysts described Monday’s declines as an overreaction rooted in a simplified storyline that powerful AI will eliminate the need for existing cybersecurity solutions. The commentaries stressed that Claude Code Security is focused on a specific use case - locating vulnerabilities in open-source repositories and offering patches - and not on operational defense in live production environments.
In a related development, Nvidia said on Monday it has formed partnerships with Akamai, Forescout, Palo Alto Networks, Xage Security and Siemens to reinforce real-time cybersecurity protections for industrial control systems. The move highlights an industry focus on pairing AI computing power with established security vendors to address operational security needs.
The sequence of events on Monday underscores tensions in how markets value AI-driven tools relative to incumbent security platforms. While Claude Code Security targets a clear technical problem within the software development lifecycle, market participants differ on how that capability should affect the valuation of firms that offer broader, real-time security services.