Buried beneath the usual talk of revenue growth, operating margins, and CEO successions in Check Point's latest earnings call (Q1 2024 Earnings Call Transcript) lies a fascinating, and potentially game-changing, revelation: the company's aggressive push into the realm of artificial intelligence. While analysts predictably focused on the company's solid Q1 performance and projections for the rest of 2024, few, if any, seem to have grasped the magnitude of Check Point's AI ambitions and the potential for these ambitions to unlock a new era of growth for the cybersecurity giant.

The company's CEO, Gil Shwed, wasn't coy about his excitement for AI, calling it "a big revolution" and hinting at its potential to "make some big revolutions" in the industry. This wasn't mere rhetoric. Check Point is actively baking AI into its existing platform, and even more intriguingly, forging ahead into entirely new markets using AI as its battering ram.

Consider this: Check Point's ThreatCloud, the backbone of its Infinity platform, now boasts over 90 security engines, with more than 50 powered by AI. That's an increase of 10 AI-powered engines in just the last year! This rapid infusion of AI into the company's threat detection and prevention capabilities is already bearing fruit, with Check Point claiming to have blocked a staggering 3 billion attacks in 2023. (Q1 2024 Earnings Call Transcript)

But Check Point's AI play goes beyond bolstering its existing defenses. The company's newly launched Infinity Copilot, a generative AI tool, offers a glimpse of a future where security management is not just automated, but intuitively guided by AI. Imagine a world where complex security issues can be diagnosed and resolved with a simple query in natural language. This isn't some futuristic fantasy; it's a reality Check Point is actively bringing to life, with customers already lining up to experience the magic of AI-powered security management. (Q1 2024 Earnings Call Transcript)

"Infinity Copilot in Action: During a demo at the CPX conference, Check Point showcased the Infinity Copilot's ability to quickly diagnose and resolve a security issue where an employee, Emily, was unable to access the SAP server. Using natural language queries, the Copilot identified the issue, proposed a solution, and with user confirmation, implemented the necessary policy changes in minutes, a task that could have taken hours using traditional methods. (Q4 2023 Earnings Call Transcript)"

Now, here's where things get truly interesting. Check Point has partnered with NVIDIA to develop an "AI infrastructure firewall" – a groundbreaking innovation designed to protect the very heart of the burgeoning AI industry: the AI server farms that power everything from self-driving cars to personalized medicine. These server farms, built around NVIDIA's powerful AI chipsets, represent a goldmine of investment, with individual servers costing upwards of $200,000. And yet, as Shwed pointed out, many of these servers remain alarmingly vulnerable, sitting exposed on the open internet with inadequate protection. (Q1 2024 Earnings Call Transcript)

This is where Check Point's partnership with NVIDIA comes into play. By embedding Check Point's firewall directly onto NVIDIA's network processor, the company can offer a dedicated security solution for AI infrastructure, preventing attacks that could cripple AI development, corrupt training data, and even hijack control of these expensive systems.

The potential of this market is difficult to overstate. Hundreds of thousands of AI servers are being deployed globally, representing a potential goldmine for Check Point. While the company is still navigating the complexities of this nascent market, the fact that the underlying technology is already mature – built on the foundation of their existing Light Speed product – suggests that this AI infrastructure firewall could quickly become a significant revenue driver.

Hypothetical Revenue Projection for Check Point's AI Infrastructure Firewall

The following chart illustrates a hypothetical scenario for Check Point's potential revenue from AI infrastructure firewalls, assuming they capture 10% of the market with an average sale price of $10,000 per server. The projection factors in the expected double-digit growth of the AI industry.

This, I believe, is the hidden gem that most analysts missed in Check Point's earnings call. The company's aggressive push into AI, not just as a feature but as a gateway to new markets, could be the key to unlocking the double-digit growth that has eluded them for years. While the transition to a subscription model and the refresh cycle driven by their new Quantum Force gateways will undoubtedly contribute to growth, it's their strategic bet on AI that could truly propel Check Point into a new era of prosperity.

"Fun Fact: Check Point's firewall technology was initially developed for the Israeli military, a testament to the company's deep roots in security and a potential foreshadowing of its future dominance in the security of the AI-powered world."