Summary
Barclays identified five software companies it believes are well-positioned to benefit from the shift in security requirements that will accompany wider adoption of artificial intelligence. The bank's analysis centers on vendors that provide foundational security and data protection services as organizations deploy AI tools, agents, and workloads across networks and government systems.
Why these names
Barclays emphasized platform security providers and data protection specialists as leaders in its rankings. The firm framed its picks around the idea that as enterprises accelerate deployment of AI capabilities, underlying networks and workflows will change - and security stacks must adapt alongside those changes. Demand is expected to grow for network security, unified platform security, and data-specific protections as AI traffic and agentic operations increase.
Top five picks
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Palo Alto Networks (NASDAQ:PANW) - Barclays placed Palo Alto Networks at the top of its list. The bank noted that as AI adoption pushes changes in applications, agents, and workloads, network architectures and workflows will evolve and create greater need for security that follows those shifts. Barclays expects AI-driven increases in network traffic could translate into stronger demand for network and platform security tools. The company has also drawn renewed attention from analysts; Jefferies and Benchmark raised their price targets based on the companys AI outlook, while UBS and Guggenheim maintained Neutral ratings.
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CrowdStrike (NASDAQ:CRWD) - Barclays highlighted CrowdStrike as a scaled security platform with origins in endpoint protection. The firm described CrowdStrike as on a path to become durable, mission-critical infrastructure for securing and enabling global AI adoption, given its unified security platform. Recent corporate moves include expanding its Project QuiltWorks AI risk framework to encompass several cyber insurance companies. Jefferies and Benchmark also raised price targets on CrowdStrike, citing AI-related strength.
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Varonis Systems (NASDAQ:VRNS) - Barclays characterized Varonis as the security layer for AI tools. The bank pointed to Varonis position as a market leader in data security and noted the firm offers dedicated SKUs for Microsoft 365 Copilot and ChatGPT Enterprise, enabling it to monetize data protection demand as enterprises adopt those AI products. Varonis reported robust SaaS annual recurring revenue growth in the first quarter, prompting price target increases from DA Davidson and Wedbush. The company also announced an integration with the Claude Compliance API to monitor AI activity.
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Cloudflare (NYSE:NET) - Barclays described Cloudflare as the control plane for agentic internet activity. The bank observed that Cloudflare sits in front of more than 20% of the internet and operates four business segments on a homogeneous global network. Barclays assessed that three of those segments are particularly well positioned to capture AI-driven trends such as agentic traffic, inference at the edge, vibe coding, and no-click search. In recent developments, Cloudflare announced a collaboration with Anthropic to create a secure environment for running AI agent operations. Stifel lowered its price target on the company while RBC Capital reiterated an Outperform rating.
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Tyler Technologies (NYSE:TYL) - Barclays viewed Tyler Technologies as a defensive, critical-tool provider for local governments with a conservative end-market. The bank noted that Tylers software automates essential municipal functions including civic services, tax collection, courts and justice operations, and computer-aided dispatch for police. Recent news for Tyler includes a signed agreement to deliver its Enterprise Corrections system to the Riverside County, California, Sheriffs Office for five jail facilities, and the closing of a $1.44 billion convertible senior notes offering.
Contextual observations from Barclays
Barclays framed its selections around the notion that companies supplying critical infrastructure for secure AI deployment will see growing demand. The bank focused on how platform-level security, data protection, and internet control-plane capabilities intersect with AI-specific use cases, from enterprise deployments of Copilot and ChatGPT Enterprise to agentic AI traffic and edge inference.
Clear summary
In sum, Barclays singled out five software names it expects to benefit as AI integration forces enterprises and government entities to reassess security and data protections. The picks emphasize platform security, data security, internet control-plane services, and municipal software that supports government operations.
Key points
- Barclays prioritized platform security providers and data protection specialists as likely beneficiaries of AI-driven security demand.
- The bank identified five companies - Palo Alto Networks, CrowdStrike, Varonis Systems, Cloudflare, and Tyler Technologies - each tied to different layers of security or government technology needs.
- Sectors impacted include enterprise security, cloud and edge infrastructure, and government technology systems that support civic operations and public safety.
Risks and uncertainties
- Analyst views vary across the picks - while some firms received price target increases from Jefferies, Benchmark, DA Davidson, Wedbush, and others, some analysts have maintained Neutral ratings or adjusted price targets downward, indicating mixed sentiment in the sell-side community.
- Market adoption and monetization of AI-specific SKUs and integrations are referenced but remain contingent on enterprise and government uptake of AI tools; Barclays frames potential demand but actual outcomes depend on those adoption rates.
- Company-specific developments such as partnerships, product expansions, and capital markets activity factor into the outlook, but Barclays conclusions rely on continued relevance of those developments to security and data protection demand.
Note: This analysis reflects Barclays reported rankings and related analyst activity as described above.