glass wing project. It sounds like something out of a spy movie. But those two words, and the work behind them, from AI baby Anthropic sent the battered cybersecurity stock soaring along with other giant stocks. Glasswing is named after a butterfly with transparent wings as a metaphor for spotting visible bugs. Anthropic’s new AI model aims to protect the world’s most critical software. Unlike previous Anthropic announcements, which resulted in investors dumping anything remotely thought to be disrupted by AI, this announcement is a breath of fresh air. why? That’s because the project will see Anthropic working with club namesakes including Amazon’s AWS cloud division, Apple, Broadcom, CrowdStrike, Palo Alto Networks, Alphabet’s Google, Microsoft, and Nvidia. JP Morgan, the Linux Foundation and former club stock Cisco Systems were also mentioned. Anthropic may not be a Wall Street research firm, but investors had better believe they’re reading this press release as if it’s the start of coverage of all the companies named getting their stamp of approval into the AI era. The announcement late Tuesday made it clear that not everything can be vibe-coded into existence. Even AI unicorns sometimes need best-in-class partners. As Anthropic states, “No organization can solve these cybersecurity problems alone. Cutting-edge AI developers, other software companies, security researchers, open source maintainers, and governments around the world all have important roles to play.” Project Glasswing precedes the release of Anthropic’s long-awaited Mythos model. Late last month, the mere mention of the company’s advanced cybersecurity features caused investors in cyber stocks to withdraw. We have argued that these AI-induced declines are false. AI should enhance the need for cybersecurity, not reduce it. While AI can help defend against cyberattacks, it is only a tool in the cybersecurity tool box and does not itself replace CrowdStrike or Palo Alto Networks’ complete security platform. Furthermore, AI is also a powerful new tool that bad actors can exploit. Glasswing is Anthropic’s clearest move to support our views. As Anthropic said in a release, AI models have now reached “a level of coding proficiency that surpasses all but the most skilled humans at discovering and exploiting software vulnerabilities.” However, that doesn’t mean cybersecurity companies are obsolete. That makes them all even more important. “It will not be long before such capabilities proliferate beyond the actors committed to their safe deployment. The economic, public safety, and national security implications could be profound. Project Glasswing is an urgent effort to harness these capabilities for defense purposes,” Anthropic wrote. So, where does this leave us? Well, the announcement couldn’t have come at a better time. One concern emerging on Wall Street is that once the war with Iran, which has now been going on for more than five weeks, is fully resolved, investors will sell AI disruption and return to buying “high asset, low obsolescence” companies. The so-called HALO trade was disrupting the technology sector even before the war with Iran. The idea is that AI tools could allow companies to develop software in-house instead of current suites like ServiceNow and Salesforce, or at least operate with fewer staff, thereby reducing demand for enterprise software companies that charge by the seat. Anthropic’s announcement doesn’t necessarily counter that deal, but it should bring more nuance. The most frustrating thing for those of us who are fundamental investors focused on bottom-up analysis is the lack of nuance. We’ve felt the pain through our positions at Salesforce, CrowdStrike, Palo Alto Networks, and to some extent Microsoft, but it was the big names in cybersecurity that made our case for enduring the decline. That’s what we did with CrowdStrike. We think selling with Salesforce is overkill and the company shouldn’t be excluded. But the concern that demand could decline as Salesforce customers try to do more with fewer employees or code some tools in-house is at least understandable. However, we have maintained that the price action is nonsense as it relates to our cybername. As more powerful cyber tools become available around the world, the demand for security will increase, not decrease. Anthropic’s new initiative to form a coalition of the world’s most powerful companies to protect critical technology infrastructure makes that view even clearer. Anthropic’s news doesn’t completely reveal its support for the broader software sector of the market. Because it shows that Mythos is incredibly powerful and has the potential to disrupt at least some of today’s go-to software solutions. However, the Iran ceasefire agreement caused stock prices in the technology industry, particularly those named as part of Glasswing, to bottom out in the short term. .SPX .IXIC YTD Mountain Take a quick look at the S&P 500 and Nasdaq YTD markets and be careful not to frame your thoughts solely around Wednesday’s movements. Despite the tenuous deal with Iran, West Texas Intermediate crude oil prices fell more than 15%, while the S&P 500 and Nasdaq each surged more than 2%. While we don’t typically recommend chasing big gains, it’s important to remember that with last week’s positive price action, many of these tech stocks are still down significantly this year and could still help lower their overall cost base. CrowdStrike remains our preferred choice of the two cyber names for those considering an eventual cyber acquisition, Jim Cramer said Wednesday morning. “I know it’s expensive, but I think CrowdStrike will reach an all-time high,” Jim predicted. However, don’t expect it to happen overnight. CrowdStrike’s stock price on Wednesday was around $430 a share, still well below its November closing high of just over $557. It’s never easy to buy a stock that has soared from recent lows. Rather than getting paralyzed thinking we missed a move, consider that the facts have changed (for now) both in terms of Iran and oil, and in terms of how the market will view the companies listed as early partners in Project Glasswing going forward. We typically look at buying at a lower price as a way to increase our margin of safety. You should also understand that it may be safer to pay a little more after new information hits the market than to try to catch a falling knife in the hopes of receiving the latest information that changes your sentiments. (Jim Cramer’s charitable trusts are long AAPL, AVGO, CRWD, PANW, GOOGL, MSFT, NVDA, CRM. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
