Sometimes the market does something so stupid you have to just laugh. Friday was one of those days.
CrowdStrike (CRWD) and Cloudflare (NET) both cratered nearly 10% because Anthropic announced that Claude now has a code review skill that can find security vulnerabilities in software. And apparently, the algorithmic traders decided this means cybersecurity companies are toast.
There's just one problem: CrowdStrike and Cloudflare don't do code review.
Let me explain this as simply as possible. Cloudflare protects your servers from getting hammered by bots and DDoS attacks. CrowdStrike installs endpoint protection software (called Falcon) on your devices to stop malware and detect breaches. Neither company makes tools that review your code for bugs before you deploy it.
The companies that should be worried? Firms like SonarQube and Snyk, which actually compete in the application security and code analysis space. Neither is publicly traded, by the way, so the algos couldn't even sell the right stocks if they wanted to.
As one Reddit user in r/wallstreetbets put it perfectly: "That would be like not wearing your seatbelt while driving because you just tightened all the nuts on your wheels." Even if Claude fixes every software bug in existence, you're still going to need protection from external threats and malicious actors. The two things aren't even related.
If anything, Cloudflare should benefit from the AI agent boom. As tools like Claude and OpenAI's agents start crawling the web autonomously, bot detection and traffic management becomes more valuable, not less. With AI agents flooding the internet, companies will need Cloudflare's infrastructure more than ever.
So what happened here? Simple: momentum-chasing algorithms saw the words "security" and "AI" in the same headline and hit the sell button without reading past the first sentence. It's the kind of algorithmic idiocy that creates opportunities for actual humans who understand what these companies do.
The Reddit poster who flagged this—someone who actually works in the industry—put it bluntly: "Take it from someone in the biz: Cloudflare and CrowdStrike do not make application security products that help with code review. They have little to no exposure to this product release."
If you've been looking for an entry point into CRWD or NET, Friday's panic might have just handed you one. Just make sure you're buying because you understand the business, not because you're hoping the algos figure out their mistake next week.
Because if there's one thing we've learned, it's that the market can stay irrational longer than most people can stay solvent.
