The super explosive point of the AI trend: Network security always takes priority The theme of "AI + network security" is entering a long-term bull market.

A research report recently released by the Wall Street financial giant Morgan Stanley showed that as the world enters the AI era, the current network security market is maintaining strong growth momentum, with global enterprises, especially American technology giants, steadily increasing their investments in the field of network security due to multiple driving factors. According to Morgan Stanley's research data, global expenditure on network security is expected to grow by around 9.8% in 2025, a growth rate significantly higher than the overall IT budget level. This optimistic outlook mainly stems from the expansion of the "attack surface" globally due to cloud computing and generative AI technologies, the increasingly complex means of network threats (including hackers utilizing cutting-edge AI large models), and the increasingly strict regulatory compliance requirements surrounding AI and data security. The Morgan Stanley analyst team stated, "AI + network security" is expected to become the next major investment theme in the cybersecurity industry, as artificial intelligence is deeply influencing the landscape of network security: on one hand, AI expands risks and threats, while on the other hand, it fosters new demands for network security technology and advanced network security solutions integrating artificial intelligence. With more leaders in the network security industry focusing on the "AI + network security" model, it is expected to further enhance the importance of network security options in enterprise IT spending and reshape the logic of technology stock investments. Given the current tight global IT spending environment and the tendency of enterprise clients to prefer integrated procurement, network security software companies face certain pricing pressures and competition. In addition, factors such as the tightening US fiscal environment led the Morgan Stanley analyst team to tactically prefer companies with strong product cycles or differentiated advantages, and to approach with caution those experiencing slowing growth or overvaluation. The report highlighted that the long-term prospects for the security industry are still clear: the rapid updates and expansion of security needs brought about by generative AI and public cloud technologies continue to make network security an attractive "long-distance race track," however, differentiation within the industry is projected to emerge around 2025. The Morgan Stanley analysis team stated that the science fiction theme of "AI + network security" is gradually transitioning from concept to reality. While it may not ignite an investment frenzy as quickly as AI itself, its impact is profound and comprehensivestrengthening the logic for the growth of security spending, as well as altering the value assessment of the cybersecurity industry in the capital markets. For future investment trends, Morgan Stanley predicts that AI will become more tightly integrated into all aspects of network security, serving as one of the important themes in the next phase of the global network security market, with the "AI + network security" theme poised to move beyond the long-term bull market curve. Network security companies like Cloudflare (NET.US) are favored for their diversified product portfolios and cutting-edge technology applications. The Morgan Stanley analyst team recently reiterated their "overweight" rating for Cloudflare, expressing optimism in its continued breakthroughs in edge networks, security access (SASE/Zero Trust), and developer services, and projecting accelerated growth in its performance by 2025. Additionally, leading network security companies like Fortinet (FTNT.US), Palo Alto Networks (PANW.US), CrowdStrike (CRWD.US), and Okta (OKTA.US) were all given "overweight" ratings by Morgan Stanley, emphasizing their status as core beneficiaries of the "AI + network security" wave. Although CyberArk (CYBR.US) received a "neutral" rating, it is a network security company that Morgan Stanley tactically favors. As a leader in the Privileged Account Management (PAM) sector, CyberArk's core business has shown steady growth, with channel feedback generally meeting or slightly exceeding expectations. At the same time, the company is actively expanding into new areas, including identity governance (through the acquisition of Zilla Security) and machine identity management. These initiatives are broadening their product line, meeting the demand for protecting machine credentials and automated processes in the AI era. Network Security Market Trends and Spending Growth Logic for 2025 Morgan Stanley's research data indicates that the overall network security market is expected to continue its strong growth trend through 2025. Surveys among hundreds of enterprise CIOs show that the growth rate of network security spending will far exceed the average level in IT: an expected year-on-year increase close to 10%, significantly higher than the overall IT budget growth as shown in Morgan Stanley's surveys (about 3-4%). This indicates that network security spending will continue to increase as a proportion of IT expenditures, reflecting its high priority. Morgan Stanley stated that the primary drivers of the growth in network security spending come from three long-term trends: firstly, the comprehensive acceleration of digitization and cloud computing penetration has led to an increase in the attack surface, with the application of generative AI technology resulting in more potential risk entry points; secondly, the frequency and complexity of network attacks are increasing daily, particularly as hackers also use advanced tools like AI to enhance their attack capabilities, making the network security threat environment more severe; and thirdly, global regulatory and compliance requirements are becoming stricter, leading companies to face more stringent standards in data security, privacy protection, and AI governance technology. The Morgan Stanley analysis team emphasized that these factors collectively support the core role of network security as a "must-have" investment, even when overall IT budgets are slowing down, security-related spending still has a defensive nature. Morgan Stanley's latest survey of CIOs overall shows a stable and rising outlook for security budgets: the expected growth rate of network security spending in 2025 has been further revised up to around 9.8% from the previous quarter's survey, with network security being the least likely area to be reduced, indicating its "bottom-line" role in enterprise IT. Additionally, the importance of security technology in related IT areas, such as cloud computing, is becoming increasingly apparentsecurity capabilities are seen as a primary consideration when selecting cloud service providers, further boosting the demand for leading global network security companies. In the view of the Morgan Stanley analysis team, the digital trends driven by cloud computing and AI, the increasingly serious network threat environment, and the pressure for security system compliance are jointly laying the logical foundation for the near-double-digit growth in security spending in 2025. AI + Network Security: Next Phase Theme Network security services enhanced by the new generative AI technology combine the unparalleled convenience brought by low technical thresholds and the exponential efficiency improvement brought by AI technology, making them highly attractive for enterprises that are investing in AI software applications. Developing AI software applications relies on core technologies such as AI large models and enterprise-level big data, and a focus on low technical operational thresholds and efficient "AI + network security services" will undeniably provide stronger network security safeguarding for these core technologies. For example, the network security leader CrowdStrike (CRWD.US) actively integrates groundbreaking generative AI technology into its network security platform services, especially through the introduction of an AI security analyst named "Charlotte." This feature is designed to empower every user of the CrowdStrike Falcon platform, allowing them to quickly create workflows based on generative AI assistance. By interacting with and asking questions to Charlotte, this virtual AI analyst, users can easily access and manipulate various core modules to identify real-time network security vulnerabilities, threats, and other security issues, significantly enhancing the platform's effectiveness and user experience. The Morgan Stanley analysis team stated that the integration of AI with network security has become the most important new trend. In addition to the exponential efficiency gains in network security software brought by AI, its specific manifestations are diverse: firstly, the rise of the groundbreaking generative AI technology itself intensifies network security challenges, as generative AI and other technologies are widely adopted by enterprises, expanding potential attack surfacesmore data, systems, and automated processes are connected to the network, making defense boundaries more complex. AI can be a "double-edged sword," bringing risks as well as productivity tools resembling those of the Industrial Revolution. The ability to utilize AI to enhance network security defense capabilities and ensure the security of AI training/inference super systems themselves will become a new standard for evaluating the core competitiveness of network security companies. Moreover, malicious hackers also use AI to enhance their attack techniques, making network threats "intelligent." Morgan Stanley stated, "Hackers also have GenAI," which means that future attacks will be more difficult to defend against, requiring enterprises to invest more resources to counter AI-driven threats. At the same time, the application of AI-induced risks is prompting tighter regulations: for example, data security and governance requirements for generative AI are increasing, putting pressure on companies to strengthen their security systems to meet new standards. These factors further reinforce the position of network security in IT strategies. In fact, Morgan Stanley's CIO surveys show that the vast majority of CIOs plan to increase their investments in both network security and AI in 2025both are seen as "must-haves" in the digital age, jointly leading the new technology budget priorities for the year. "AI + network security" is not just a passive defense relationship; it also drives innovation in security technology. The Morgan Stanley analysis team emphasized that the integration of generative AI is expected to generate a series of new product cycles, such as improving the efficiency of Security Operations Centers (SOCs) using large language models, developing next-generation intelligent security analysis platforms, and building machine identity frameworks to protect autonomous AI agents, all of which are directions that security companies are actively exploring. Many leading companies have already integrated AI into security products, from user behavior analysis to automated threat intelligence. The Morgan Stanley analysis team expects that as these AI-driven security solutions mature and are implemented, they will open up new growth curves, providing incremental value to the industry. Consequently, Wall Street investment institutions are beginning to view "AI + network security" as one of the important investment themes in the next phasewhile focusing on the increased demand for security due to AI, they also monitor the technical evolution of security companies in the AI era. Morgan Stanley is betting that the "AI + network security" theme will emerge from the long-term bull market curve. The Morgan Stanley analyst team even stated that as risk preferences rise, it will help expand the valuations of companies related to "AI + network security," and in the backdrop of sharp macroeconomic fluctuations, the "AI + network security" sector may once again become a "safe haven" due to its enduring resilience, which is increasingly dependent on the new DRIVE of the AI era.