Okta upgraded on AI security growth potential

Okta Inc. shares advanced on Wednesday after an analyst upgrade highlighted the company's potential to capitalize on growing demand for AI-powered cybersecurity solutions.

Piper Sandler upgraded Okta to Overweight from Neutral, citing the company's leadership in identity and access management as a key beneficiary of increased enterprise adoption of AI-driven security tools. The firm raised its price target to $180 from $160, representing a 25% premium to Tuesday's closing price of $144.17.

The upgrade follows a period of volatility for Okta, which has faced scrutiny over past breaches while positioning itself as a critical infrastructure provider for digital identity management. Piper Sandler emphasized Okta's ability to integrate AI into its core offerings, including threat detection and automated response systems, as a competitive advantage.

Okta's stock has underperformed the broader software sector in 2024, declining approximately 10% year-to-date amid broader market uncertainty and sector-specific challenges. The company is scheduled to report its next quarterly earnings on June 4.

Analysts at Piper Sandler noted that while near-term macroeconomic headwinds persist, the long-term trajectory for AI-driven security solutions remains robust, with enterprises prioritizing investments in scalable and adaptive cybersecurity frameworks.