Japanese cybersecurity companies are seeing muted investor interest despite steady revenue and profit growth, as concerns mount that generative AI could disrupt their business models, Nikkei reported Thursday.

Investor questions are increasingly focused on AI tools that can identify and fix vulnerabilities automatically, according to the report.

Shares of domestic firms fell sharply after the launch of a new AI-driven security tool by a U.S. startup and have remained weak, even as global peers recovered, reflecting lingering concerns over competitiveness, the report said.

Companies also face structural challenges, including reliance on foreign software and a limited domestic customer base, raising concerns about growth prospects as AI-driven competition intensifies, according to the report.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)