Cycode, an AI-native application security leader, today published its State of Product Security for the AI Era 2026 report, exposing a growing paradox in enterprise security. While AI adoption has become nearly universal across software development, governance and visibility have not kept pace.
A survey of more than 400 CISOs and security practitioners found that the lack of oversight has fueled a growing “Shadow AI” problem, prompting a major shift in enterprise security strategy as unmanaged AI rises to the top of the risk agenda.
The report’s findings highlight an industry that has already crossed a critical threshold, bringing a new set of urgent security challenges:
- AI Code is Ubiquitous: All organizations confirm having AI-generated code within their codebases.
- The Role of AI is Increasing: Nearly one-third (30%) of respondents state that AI now creates the majority of code in their organizations.
- “Shadow AI” is the Blind Spot: More than four out of five (81%) lack full visibility into how and where AI is being used across the software development lifecycle (SDLC).
- Investments are Pivoting to AI Security: In response, 100% of organizations plan to invest more of their budget in AI-related security initiatives in the next 12 months.
“The findings make it clear: AI development is no longer a future trend; it is today’s reality. As security struggles to keep pace with this rapid adoption, the stage is set for a significant supply chain breach, with Shadow AI as the attack vector,” said Lior Levy, CEO and Co-Founder of Cycode. “It’s no longer sufficient to just find vulnerabilities in AI-generated code. The rapid spread of Shadow AI demands a strategic response: we must gain complete visibility and governance over the entire AI toolchain. This imperative is why Cycode is empowering organizations with the essential visibility, policies, and controls needed to secure AI development from prompt to production.”
The Productivity Boom vs. The “Shadow AI” Problem
The report shows why AI adoption is unstoppable. Participants overwhelmingly report that AI increases productivity (78%), improves code quality (79%), and accelerates time to market (72%).
However, while AI boosts productivity, it also introduces significant risks. Despite near-universal AI adoption, most organizations (52%) lack a formal AI governance framework. This has led to a proliferation of Shadow AI, including the rapid, unmanaged spread of AI development tools, models, and coding assistants. As a result, security leaders have identified AI-generated code vulnerabilities as both their biggest blind spot and their top security priority for the upcoming year.
Leaders Reject Tool Sprawl, Embrace Consolidation
The growing focus on AI security is prompting a major rethinking of how enterprises manage their tools. According to the report, 97% of organizations plan to consolidate their application security stack within the next year, and every one of them is increasing investment in AI-driven security initiatives. This shift marks a clear move away from the “tool sprawl” that has long plagued security teams. By embracing unified platforms, leaders aim to cut through complexity, improve visibility, and take tighter control of AI-related risk across their development pipelines.
“As enterprises accelerate their use of AI in software development, the surface area for application security risk is expanding faster than traditional controls can manage,” said Katie Norton, Research Manager at IDC. “The rise of shadow AI compounds this challenge, creating new layers of exposure that often can’t be fully seen or governed. These market dynamics observed by IDC align with the findings of Cycode’s State of Product Security in the AI Era, highlighting the need for more unified and context-driven approaches to keep security aligned with the pace of AI-driven development.”
The State of Product Security in the AI Era Report provides a comprehensive data-driven look at how AI is reshaping security strategies, governance practices, and technology investments for global security and engineering leaders. To access the full report, visit https://www.cycode.com/state-of-product-security-ai-era-2026.
