Microsoft Corporation (MSFT.US) hit by widespread service outage; U.S. cybersecurity sector rises in premarket trading

Cybersecurity stocks rose in Friday's U.S. premarket session, lifted by a widespread service outage at Microsoft Corporation (MSFT.US) that left multiple services, including Outlook and Teams, unavailable for several hours. As of press time, Palo Alto Networks (PANW.US) was up more than 3%, CrowdStrike (CRWD.US) and Okta (OKTA.US) were up nearly 3%, Rubrik (RBRK.US) was up more than 2%, Fortinet, Inc. (FTNT.US) and SentinelOne (S.US) were up nearly 1%, while Microsoft Corporation was down nearly 2%. Microsoft Corporation's Outlook, Teams and Copilot services had still not been restored more than 12 hours after the disruption began, affecting operations at enterprises, individual users and some government departments. It is one of the company's longest-lasting service outages. Microsoft Corporation attributed the disruption to a server issue and said there was no evidence of malicious activity. Microsoft Corporation said it had observed signs of stabilization after rolling out fixes more broadly and working to restore services. AI development and escalating cyberattacks drive the cybersecurity sector higher Microsoft Corporation's widespread service outage this time (although the company said there was no evidence of malicious activity), together with the premarket rise in cybersecurity stocks on Friday, underscores how heavily enterprises rely on the stability of cloud-based office platforms and digital infrastructure. Year to date, cybersecurity stocks have become one of the standout segments of the 2026 U.S. technology sector. Data show that the cybersecurity-themed ETF First Trust Nasdaq Cybersecurity ETF (CIBR) has gained more than 35% year to date, clearly outperforming the roughly 12% gain in the Nasdaq 100 Index over the same period. Among individual stocks, year to date, Palo Alto Networks is up more than 75%, CrowdStrike more than 96%, Okta more than 111%, Rubrik more than 44%, Fortinet, Inc. more than 63%, and SentinelOne nearly 49%. AI development and escalating cyberattacks have become the core DRIVE behind the rally in U.S. cybersecurity stocks. With AI applications spreading rapidly, the corporate attack surface expanding, and threats such as ransomware and identity theft continuing to evolve, demand for cybersecurity products and services remains highly resilient. The rapid adoption of AI is driving cybersecurity demand in two directions. On one hand, as enterprises deploy AI models, agents and cloud applications, the volume of data, systems and identities that must be protected keeps growing, expanding the attack surface. On the other hand, hackers have begun using AI to improve attack efficiency, making cyber threats more automated and complex. CrowdStrike's "2026 Global Threat Report" shows that attacker activity using AI increased 89% in 2025. IBM research shows that about a quarter of data breaches now involve AI technology, with the average loss from such incidents at about US$6 million, higher than the average loss of about US$4.99 million for data breaches globally. Growth in corporate cybersecurity budgets also provides fundamental support for the sector. A survey published by Boston Consulting Group (BCG) in August this year shows that 83% of surveyed cybersecurity leaders are increasing cybersecurity spending, nearly 90% of enterprises have suffered a cyberattack in the past year, and more than 80% of respondents expect to continue increasing related budgets through 2027. Notably, new corporate security spending is gradually tilting toward areas such as cloud security, data security and threat intelligence, with more than half of respondents planning to increase spending in these areas. As enterprises incorporate AI agents, models and related data into daily operations, AI system security is also expected to become a new budget growth area. However, the sharp rally in cybersecurity stocks this year also means valuation pressure cannot be ignored. Share price gains at some cybersecurity companies have clearly outpaced earnings growth, raising market expectations for future revenue, orders and profitability. Citi previously noted that the sector's enterprise value-to-sales ratio for the next 12 months has risen to about 22x, far above about 10x six months earlier. In other words, even if industry demand remains strong, high valuations could amplify stock price volatility if subsequent results fail to consistently beat market expectations or if customer budget growth falls short. Cybersecurity earnings reports are coming soon On the earnings front, investors will focus on the results of Palo Alto Networks, CrowdStrike, Rubrik and SentinelOne. Palo Alto Networks will report first-quarter fiscal 2027 results after the U.S. market close on November 18. The market expects revenue of about US$3.31 billion for the quarter, up about 33.7% year on year, and adjusted earnings per share of about US$0.97. Given the company's continued push to consolidate its cybersecurity platform and expand its AI security product lineup, investors will focus on order growth in the platform business, progress in commercializing AI security products, and the company's guidance for revenue and billings in subsequent quarters. Rubrik plans to report third-quarter fiscal 2027 results on November 30. The company expects third-quarter revenue of about US$430 million (guidance range of US$429 million to US$431 million), up about 22.7% year on year, and adjusted earnings per share of about US$0.08 (guidance range of US$0.07 to US$0.09). The company's revenue in the previous quarter rose 38% year on year to US$427.3 million; subscription ARR rose 33% year on year to US$1.66 billion, and it raised several fiscal 2027 guidance items. As ransomware attacks and AI-related data risks increase, demand for data backup, recovery and cyber resilience solutions continues to grow, and investors will focus on its subscription ARR growth, free cash flow performance and full-year guidance. CrowdStrike is expected to report third-quarter fiscal 2027 results on December 1. The market currently expects revenue of about US$1.53 billion for the quarter, up about 23.8% year on year, and adjusted earnings per share of about US$0.31. The company previously reported strong second-quarter results, with record net new ARR of US$333 million, up 51% year on year; it also raised the midpoint of its fiscal 2027 net new ARR growth guidance to 34% year on year. In addition, Falcon Flex business ARR exceeded US$2.29 billion, up 101% year on year. Therefore, net new ARR in the next quarter, Falcon Flex penetration and whether full-year guidance can be raised further will be key market focuses. SentinelOne is expected to report third-quarter fiscal 2027 results on December 3. The company previously guided third-quarter revenue of US$309 million to US$311 million and adjusted earnings per share of US$0.08 to US$0.09; full-year fiscal 2027 revenue guidance is US$1.202 billion to US$1.207 billion. As SentinelOne is still in a phase of continuously improving profitability, the market will focus not only on revenue growth and customer expansion but also on its non-GAAP operating margin, cash flow and whether full-year profit guidance can meet or exceed expectations. As for Fortinet, Inc., the company already reported third-quarter 2026 results on October 28: revenue rose 20% year on year to US$2.08 billion, product revenue rose 37% to US$765 million, and billings rose 29% to US$2.34 billion; non-GAAP earnings per share were US$0.91, and operating cash flow reached US$946 million. The company also raised its full-year 2026 revenue guidance and expects fourth-quarter revenue of US$2.155 billion to US$2.245 billion and billings of US$2.775 billion to US$2.925 billion. Strong product revenue and billings growth indicate that demand for corporate cybersecurity infrastructure upgrades remains robust. Overall, Microsoft Corporation's latest service outage provides a short-term sentiment catalyst for the cybersecurity sector, but the industry's medium- to long-term performance will still depend on whether AI-driven security demand can continue to actual corporate orders and whether leading vendors can further expand market share amid the platform consolidation trend. For investors, the dense slate of earnings reports in the coming weeks will be an important window to test whether the sector's high valuations can be supported by results.