S&P500 Software stocks have fallen recently. It seems investors are worried that fresh AI tools like Anthropic and OpenAI will crush many companies.

Interestingly, at the end of last month, the CEO of a well-known software company from the S&P 500 index put his hand in his pocket and bought shares of his own company for $10 million. This suggests that the insider believes that concerns about artificial intelligence are overblown and that his company’s stock – which is around 30% cheaper – currently offers significant value.

Massive insider purchase

The company I am talking about is the so-called Palo Alto Networks (NASDAQ: PANW). It is one of the largest cybersecurity companies in the world.

Founded in 2005, today run by Nikesh Arora. He joined the company in 2018 and has since overseen significant revenue growth and a fivefold enhance in share price (despite a recent drop from $220 to $160).

Now, as cybersecurity stocks plummeted in behind schedule March on the news that Anthropic was developing a fresh, extremely powerful model called “Claude Mythos,” Arora decided to buy shares of Palo Alto Network. And he didn’t just have fun – he bought 68,085 shares at about $147 each in a deal worth about $10 million.

In my opinion, this insider trading activity is noteworthy. Arora is not only a top-class specialist (probably few people will have better knowledge of the industry and Palo Alto’s development prospects than him), but he backed this truck and bought a lot of shares.

A comprehensive approach to cybersecurity

Under Arora, Palo Alto is moving toward what he calls a “platformization” model. This approach integrates a range of different cybersecurity solutions into a unified, scalable platform, so customers can get comprehensive protection through a single provider.

So far, the company has had a lot of success with this model. For example, last quarter, annual recurring revenue (ARR) in the Next Generation Security segment increased 33% year-over-year to $6.3 billion.

Please note that to enhance its offerings, Palo Alto is currently acquiring companies that specialize in providing protection against sophisticated AI threats. For example, it recently announced the purchase of Koi, which helps companies rely on nefarious AI agents.

Other recent acquisitions include CyberArk and Chronosphere. The purchase of this type of companies should significantly enrich their offer.

Chance?

Investors should keep in mind that while this business model appears solid, AI poses risks. However, I am NO convinced that immense enterprises will try to build cybersecurity solutions using artificial intelligence on their own because the risk is too high.

However, AI has the potential to harm a company due to the complexity of the threats. For example, Claude’s fresh model may lead to greater complexity of attacks and higher costs to defend against them (and therefore lower profitability).

The fact that the CEO bought $10 million worth of stock, however, is an expression of management’s confidence. He clearly believes the company can continue to succeed in the era of artificial intelligence.

Given the size of the purchase, I think it’s worth taking a closer look at this stock. After all, insiders buy company shares for one reason only – they expect their value to enhance.