Cybersecurity stocks fell sharply on Wednesday after reports that OpenAI is in early talks to acquire a cybersecurity startup.
Palo Alto Networks lead the retreat as it dropped 4%, followed by CrowdStrike.
No terms or target have been officially disclosed, but Trail of Bits, a firm specialising in finding and fixing vulnerabilities in open-source software, is seen as the likely acquisition target.
A deal would give OpenAI its own security products and direct customer relationships, rather than a licensing role.
And it would raise concerns over the ChatGPT owner's Daybreak Cyber Partner Program, which allows security vendors including Palo Alto, CrowdStrike, Fortinet, Cisco and Cloudflare to build on its frontier AI models.
Palo Alto chief executive Nikesh Arora told analysts this week that OpenAI, Anthropic and Google had all engaged as partners, arguing that customer demand for platform consolidation remained a tailwind for larger players.
All three stocks had posted strong gains this year, leaving them exposed to any credible new entrant contesting their largest accounts.
