Cybersecurity & Digital Trust

The United States revealed on Wednesday that authorities have disrupted computer system intrusions by a hacker group backed by the Chinese government, stating that NASA, the Federal Reserve, and the U.S. Senate were among the targeted agencies. The U.S. Department of Justice, along with the FBI, announced the seizure of internet domains used in attacks on critical infrastructure and highly sensitive data networks. Court documents unsealed in federal court in California indicated that the domains used as platforms for the intrusions, known as "QScan" and "QTRouter," were operated by a hacker group with Chinese government backing. The group, called "QTFY," was contracted to work for Nanjing Xinjiuwei Network Technology Co., based in China. U.S. Attorney General Todd Blanche stated that the domain seizures were "the latest technical operation in our campaign to disrupt widespread, indiscriminate cyber attacks sponsored by the People's Republic of China." However, the Department of Justice did not disclose details about the damage to targeted agencies, which also included the NIH, the Department of Energy, and the Department of Health and Human Services, and noted that private companies in the U.S. and South Korea were also targeted. The U.S. government said the hacker group was established in 2018, has ties to a technology company that conducts cyber operations for China, and has business relationships with entities under China's Ministry of State Security. The U.S. announcement comes about a month before President Donald Trump is scheduled to meet with Chinese President Xi Jinping at the White House, where artificial intelligence and other advanced technologies are expected to be top agenda items.

CrowdStrike raised its fiscal 2027 net new ARR outlook to $1.355 billion at the midpoint, up from its initial forecast, after reporting record second-quarter results. The company posted all-time record net new ARR of $333 million, with ending ARR reaching $5.84 billion, and total revenue grew 26% year over year to $1.47 billion. Falcon Flex adoption surged, adding more than 935 accounts and pushing ending ARR from Flex accounts above $2.29 billion. AIDR ending ARR nearly tripled versus the first quarter, and next-gen SIEM ending ARR surpassed $695 million. For the full year, CrowdStrike now expects total revenue between $5.99 billion and $6.011 billion, and for the third quarter, it projects ARR of $6.184 billion to $6.188 billion and revenue of $1.523 billion to $1.529 billion.

Shares of U.S. cybersecurity giant CrowdStrike Holdings surged in after-hours trading on the 26th. The full-year revenue outlook provided in its earnings release exceeded analyst expectations, highlighting robust demand for cybersecurity amid AI-driven threats. According to the release, revenue for the August-October period is expected to be up to $1.53 billion, surpassing the market estimate of $1.52 billion. Full-year revenue is projected at $5.99 billion to $6.01 billion, above the market estimate of $5.94 billion. The stock rose as much as 12% in after-hours trading and is up 62% so far this year. Revenue for the May-July period was $1.47 billion, beating the market estimate of $1.44 billion, and adjusted earnings per share were $0.31, above the expected $0.29. Annual recurring revenue (ARR) was $5.84 billion, exceeding the estimate of $5.79 billion.

President Trump signed an emergency order Wednesday that aims to keep some foreign-made transformers and other critical energy equipment out of U.S. electric grids, as reported by Bloomberg. The order generally bars the purchase, importation, or installation of certain foreign-made bulk-power system electrical equipment and associated software where it could pose cybersecurity or operational risks, and sets the stage for potentially new conditions on the continued use of equipment already installed. China accounts for about 80% of the world's battery and solar inverter manufacturing capacity, according to the International Energy Agency, and scores of Chinese large power transformers have been imported into the U.S. over the past decade, per a 2020 Commerce Department investigation. The executive order warned of "certain foreign actors" who are "increasingly creating and exploiting vulnerabilities in the United States bulk-power system." Power utilities and other companies using such equipment are effectively put on notice while the Department of Energy develops rules to implement the ban. Analysts say the move could benefit domestic manufacturers and companies like SolarEdge Technologies, Enphase Energy, and Tesla.

In after-hours trading, Nvidia rose 4% after beating expectations on both lines in the second quarter, with revenue more than doubling to $96.22 billion and adjusted earnings of $2.22 per share, versus analyst estimates of $92.17 billion and $2.10 per share. Salesforce soared 12% after reporting second-quarter revenue of $11.35 billion, slightly above the consensus estimate of $11.32 billion, and adjusted earnings of $5.90 per share, more than double year-over-year due to an investment gain. CrowdStrike Holdings gained 10% after beating consensus on revenue and earnings per share, while Okta surged 19% on stronger-than-expected results and raised full-year guidance. Urban Outfitters fell 3% despite in-line results, and Synopsys dropped 2% even after raising its annual forecasts.

CrowdStrike, Okta, and HP Inc. reported earnings after the bell, with shares moving sharply in opposite directions. CrowdStrike jumped after a strong second quarter, with revenue and adjusted earnings topping expectations and annual recurring revenue reaching almost $6 billion, also above estimates. The company raised its full-year revenue outlook, citing strong demand as AI-driven cyber threats grow. Okta also surged after raising its full-year outlook for a second time, now expecting revenue growth of 10 to 11% with a record subscription backlog, and noting that new products make up 30% of bookings. In contrast, HP Inc. plunged despite beating estimates on the top and bottom lines and issuing upbeat guidance, as investors worried about worsening PC and printer sales and rising memory chip costs leading to higher consumer prices.

Okta reported better-than-expected sales for the second quarter of fiscal 2026, with revenue rising 10.6% year over year to $805 million, topping analyst estimates of $792.8 million. Adjusted earnings per share came in at $1.05, beating the consensus of $0.96, and adjusted operating income reached $226 million, above expectations. The company raised its full-year revenue guidance to $3.22 billion at the midpoint and lifted its adjusted EPS guidance to $3.92. However, billings declined 5.4% year over year to $681.2 million. Following the results, Okta's stock surged 16.3% to $158.07.

The Linux Foundation announced the contribution of TRACE, a new open specification for hardware-attested runtime and compliance evidence for AI agents, from OPAQUE, with support from AMD, Intel, Microsoft, and TII. TRACE creates a standardized, vendor-neutral evidence layer that binds runtime environment, software, policies, and data classifications into a portable, cryptographically verifiable artifact. The specification builds on existing standards like RATS, EAT, SLSA, SCITT, SPIFFE, and EAR, and has already seen nearly 135,000 PyPI downloads within 10 weeks of its introduction. Under Linux Foundation governance, TRACE aims to provide a common standard for verifiable AI runtime evidence across clouds and confidential computing environments.

Cisco Systems is expanding its Secure AI Factory with NVIDIA, embedding security directly into the AI infrastructure stack to counter rivals Palo Alto Networks and Fortinet. The architecture combines Cisco networking, NVIDIA AI infrastructure, and Supermicro rack-scale compute, with security built from silicon through applications and AI agents. Cisco's security revenues rose 14% year over year to $2.23 billion in the fourth quarter of fiscal 2026, and firewall orders grew over 30%. The company added more than 6,400 net new customers for products like Secure Access, XDR, Hypershield, and AI Defense since launch. Fortinet's SASE Firewall business grew 34% to over $2 billion in the second quarter of 2026, while Palo Alto's Prisma AIRS surpassed 300 customers in the third quarter of fiscal 2026. Cisco shares are up 44.2% year to date, and the Zacks Consensus Estimate for fiscal 2027 earnings is $5.11 per share, up 7% over the past 30 days.

Fortinet Federal, a wholly owned subsidiary of Fortinet, Inc., announced it has achieved Cybersecurity Maturity Model Certification (CMMC) Level 2 following an assessment by an Authorized CMMC Third-Party Assessment Organization. The certification validates the implementation of 110 security requirements aligned with NIST SP 800-171 Revision 2 for protecting Controlled Unclassified Information within its assessed environment. Fortinet Federal pursued the certification to strengthen cybersecurity across its operations and supply chain, providing customers and partners with independent validation of its security practices. Steve Hoffman, president of Fortinet Federal, emphasized the company's commitment to rigorous security practices and continuous improvement. The company's FortiGate Next-Generation Firewall maps to 83 of the 110 CMMC Level 2 security requirements, supporting nearly all 14 security domains.

The Ministry of Justice on the 26th presented to the Liberal Democratic Party's Legal Affairs Division a draft requesting approximately 985.6 billion yen (including funds under the Digital Agency's jurisdiction) for the FY2027 budget, which was approved. This represents a 15.7% increase over the FY2026 budget. The budget for strengthening the intelligence capabilities of the Public Security Intelligence Agency, an external bureau, was set at 6 billion yen, 1.8 times the previous amount. This includes 1.8 billion yen for strengthening capabilities to counter foreign government information operations and terrorist activities, and for improving capabilities in economic security and cyber fields, and 2.3 billion yen for strengthening the investigative infrastructure. The request includes an increase of 104 personnel, which, if approved, would bring the FY2027 staffing level to 1,940.

Baird tech strategist Ted Mortonson forecasts that hyperscaler capital expenditures will reach about $800 billion this year and could hit $1.1 trillion by 2027, driven by demand outstripping supply in compute and early-stage agentic adoption in enterprises. He notes that while semiconductor stocks have surged 61% and software indices are flat, the software sector is seeing short covering and institutional interest in system-of-record names. The security industry has been transformed by the introduction of Mythos, boosting names like Cloudflare, Crowdstrike, and Palo Alto, though these stocks now trade at nearly 30 times enterprise value to revenue, with some insider selling on the periphery. Mortonson cautions that changes in security architecture show up in pipeline rather than annual recurring revenue, and the street may not yet grasp how quickly that pipeline converts to orders.

The global AI governance market is projected to grow from $0.89 billion in 2024 to $5.78 billion by 2029, a compound annual growth rate of 45.3%, according to a new report from MarketsandMarkets. The firm attributes the surge to rising regulatory oversight, responsible AI initiatives, and growing enterprise adoption of generative AI, which are accelerating investment in governance platforms. North America is expected to hold the largest market share in 2024, while Asia Pacific is the fastest-growing region. Key players include Microsoft, IBM, SAS Institute, DataRobot, and Dataiku.

The global managed security services market is projected to grow from $39.47 billion in 2025 to $66.83 billion by 2030, at a compound annual growth rate of 11.1%, according to a new report from MarketsandMarkets. The firm attributes the growth to rising cyber threats, complex IT environments, regulatory requirements, and a shortage of cybersecurity talent, which are pushing organizations in finance, healthcare, government, and critical infrastructure to adopt managed services for continuous monitoring, threat detection, incident response, vulnerability management, and compliance. Fully managed security services are expected to hold the largest market share, while large enterprises are also expected to maintain the largest share by organization size. The Middle East and Africa region is forecast to register the highest growth rate, driven by digital transformation, rising cyber threats, and stricter regulations, with key players including IBM, NTT, LevelBlue, Accenture, DXC Technology, Secnap, Deloitte, Secureworks, Trustwave, and Verizon.

Palo Alto Networks reported its Network Security business had its strongest quarter in several years during the third quarter of fiscal 2026, driven by rising enterprise spending on AI and cloud infrastructure. Next-generation firewall bookings grew nearly 40% year over year, supported by Gen 5 appliances and AI data center buildouts, while software firewall ARR increased 25% year over year. Network Security accounts for about 70% of total revenues, and hardware revenues, about 10% of total, had their best quarter in a decade with a record backlog. Management expects data center expansion and higher traffic volumes to remain key growth drivers for the next several quarters and potentially several years. Competitors CrowdStrike and Zscaler are also benefiting from AI-related cybersecurity demand, with CrowdStrike's AIDR solution seeing ending ARR grow more than 250% sequentially and Zscaler surpassing 700 Zero Trust Everywhere enterprises.

Alice, an AI trust, safety, and security company, announced a $140 million funding round led by the Apax Digital Funds, with participation from MoreTech and Phoenix Financial, alongside existing investors Resolute Ventures, Grove Ventures, CRV, Highland Europe, Vintage Investments, Norwest, NFX and Claltech. The round brings total funding to $280 million, and Apax Digital will join the company's board. Alice is approaching $100 million in ARR, with its AI business growing more than 500% over the past two years. The company protects more than 3 billion people online and works with 8 of the 10 leading AI model labs, including Anthropic, Google, and Cohere. Alice will use the funding to advance its AI platform, expand its Rabbit Hole dataset of adversarial content, and scale its go-to-market organization.

Anjuna Security announced the availability of its Anjuna Seaglass platform on AMD Secure Virtualization, bringing confidential computing to on-premises data centers with one-click deployment. The platform now runs on AMD EPYC datacenter CPUs with Secure Nested Paging hardware, providing hardware-enforced memory encryption and isolation for containerized workloads without code changes. Enterprises in financial services, healthcare, and government can use the same policy model and attestation workflow across cloud and on-premises environments, with support for air-gapped deployments and compliance alignment with NIST AI RMF, DORA, HIPAA, and GDPR. Anjuna Seaglass on AMD SEV is available now.

Cisco has launched its Sovereign Critical Infrastructure portfolio in Canada, giving government, financial institutions, healthcare, and other critical infrastructure providers greater control and choice over how they run their technology. The portfolio is configurable for on-premises and air-gapped deployment, spanning Cisco's core product lines from routing, switching, and wireless to collaboration and select endpoint devices, enhanced by Cisco and Splunk security and observability solutions. Cisco says it cannot run, access, control, or remotely disable the products, putting control entirely in customers' hands, and the majority of the on-premises portfolio is IPv6-ready, FIPS 140-2/3 certified, and Common Criteria certified. The offering is designed to align with Canadian frameworks like ITSG-33 and is available to order now through Cisco and its partners. Cisco Canada President Raj Juneja said the portfolio gives Canadian organizations a new way to meet their infrastructure control needs, building on three decades of work in the country.

Leidos has received a five-year, $301 million contract to help the U.S. Army monitor and protect military networks against cyberattacks. The follow-on contract calls for round-the-clock cyber operations supporting the Department of War Information Network, the global communications network used by U.S. military organizations. The award adds to Leidos' backlog and extends an established Army relationship in a defense area benefiting from persistent demand. Leidos plans to equip its cyber specialists with AI-enabled tools intended to improve situational awareness, accelerate threat detection and coordinate responses across military networks. The company said its previous work on the Army program combined cyber operations, engineering and technology development, helping reduce the time between identifying a potential attack and responding to it.

The British government summoned energy company executives on Monday to hear measures for protecting infrastructure, after reports that hackers linked to Iran carried out a cyberattack that forced a small UK power plant to halt operations for four days. The Telegraph and the Financial Times reported that the incident occurred in July and is believed to be the work of a hacker group with links to Iran. Michael Shanks, the UK energy minister, said the government and industry are taking the incident seriously and are working with regulators and the National Cyber Security Centre to assess the threat and strengthen protective measures. He also confirmed there is no wider threat to the electricity grid and no members of the public experienced power cuts.

The Electronic Transactions Development Agency, or ETDA, is set to hold its annual performance briefing, “16 Years of ETDA: Co-Creating a Future of Digital Trust,” on 4 September 2026 to unveil its 2027 vision under the role of “Co-Creation Regulator & Facilitator,” with a focus on stronger oversight and proactive work to build a trustworthy online transaction ecosystem. Dr. Chaichana Mitrpant, Executive Director of ETDA, said the agency will move forward on building digital confidence through four key missions: advancing Digital ID for rights and qualification verification, elevating AI governance from principles to practical use through the AIGPC centre, promoting SMEs with a model linking technology and capital, and regulating digital platforms under the DPS law to protect the public from online threats.

Fortinet announced the acquisition of Virtue AI, a leader in protecting AI at runtime, to advance its Security for AI strategy and support organizations in the Agentic Enterprise era. The deal value was not disclosed and is not material to the business. Virtue AI's technology will enhance FortiAIGate to cover automated penetration testing of AI agents, agent protection and governance, continuous AI monitoring, and real-time preventive policy definition. Ken Xie, founder and CEO of Fortinet, said organizations must use AI with confidence and secure it in real-world environments. Gartner expects the AI and AI agent ecosystem security market to grow from 2.8 billion dollars in 2026 to 16.4 billion dollars by 2030.