SentinelOne Earnings Point to Strong AI-Driven Cybersecurity Demand

Shares of SentinelOne (S) rose nearly 6% Friday after the company became the latest cybersecurity firm whose results topped estimates as AI threats proliferate. 

SentinelOne on Thursday evening reported fiscal 2026 second-quarter annualized recurring revenue grew 24% year-over-year to surpass $1 billion for the first time, and raised its full-year revenue guidance. 

Jefferies analysts in a note on Friday attributed the strong results to "improved execution" and a broadening product portfolio, which will grow later this year when the company completes its acquisition of Prompt Security, "a pioneer in securing AI in runtime, preventing AI-related data leakage and protecting intelligent agents."

SentinelOne is the latest cybersecurity company to report strong demand amid a proliferation of AI-related threats. Palo Alto Networks (PANW) earlier this month topped sales and earnings estimates and issued stronger-than-expected guidance, as did Okta (OKTA). 

"As GenAI and agentic AI fundamentally reshape how businesses operate, new risks are emerging around visibility, compliance, data leakage and control," SentinelOne CEO Tomer Weingarten said on the company's earnings call, according to an AlphaSense transcript. 

Morgan Stanley analysts in a note last month identified three distinct "core secular security drivers" sustaining strong demand for cybersecurity products: "growth of the attack surface area" with the expansion of cloud computing and AI; "severity of the threat environment," referring to the increasing sophistication of AI-supported attacks; and "expanding regulatory/compliance requirements" stemming from the adoption of generative AI.

For that reason, cybersecurity remains a top priority for IT executives. According to Morgan Stanley's second-quarter Chief Information Officer survey, companies expect to increase cybersecurity software by 9.8% this year, up from 9.2% in the fourth quarter of 2024. That far outpaces plans for overall software spending, which respondents recently forecast would grow by 3.6%, down from 3.8% in the 2025 first quarter.