Palo Alto CEO Says $5 Trillion AI Buildout Needs New Security Stack

Palo Alto Networks CEO Nikesh Arora said companies must build an entirely new security stack for the roughly $5 trillion of capital spending on AI infrastructure he expects over the next five years.

Arora spoke on CNBC’s Mad Money on Tuesday, after the cybersecurity firm posted fiscal fourth quarter results that beat Wall Street estimates.

Arora Breaks Down the Math Behind $1 Trillion of Cybersecurity Debt

The executive said AI is forcing companies to modernize roughly $1 trillion of aging cybersecurity infrastructure that cannot handle attacks moving at machine speed.

“There’s approximately $1 trillion of global cybersecurity debt that must be modernized to defend against automated threats because they operate instantaneously,” he stated during the earnings call.

He reached that figure through simple arithmetic. Security equipment lasts about seven years, and annual spending runs $200 billion to $300 billion.

“You’re going to see $5 trillion of capex spend in the next five years with people building AI data centers and having tons and tons of agents running around. You also have to build a net new security stack for that,” he said.

Arora highlighted the launch of Anthropic’s Mythos model earlier this year as a major shift in the cybersecurity space. The model’s ability to identify and exploit software vulnerabilities pushed companies to take cybersecurity more seriously.

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Results Back Up the Argument

That shift in urgency is already showing up in the company’s numbers. Quarterly revenue reached $3.41 billion, up 34% year over year, against analyst estimates of $3.35 billion. Adjusted earnings came in at $1.02 per share, four cents above expectations.

Next-generation Security annual recurring revenue hit $9.10 billion, a 63% increase. Remaining performance obligations rose 34% to $21.2 billion.

The company guided to $14.10 billion to $14.20 billion in revenue for fiscal 2027, ahead of the $13.79 billion forecast from analysts. 

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