Palo Alto Networks (PANW) AI Stock Analysis

• Market Cap: $138.06B
• Dividend Yield: N/A
• Average Volume (3M): 13.88M
• Price to Earnings (P/E): 71.2
• Beta (1Y): 1.26
• Revenue Growth: 15.30%
• EPS Growth: -60.71%
• Country: US
• Employees: 15,758
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 1.03
• Shares Outstanding: 816,000,000
• 10 Day Avg. Volume: 7,798,128
• 30 Day Avg. Volume: 13,877,217
• PEG Ratio: -1.76
• Price to Book (P/B): 14.70
• Price to Sales (P/S): 12.47
• P/FCF Ratio: 33.15
• Enterprise Value/Market Cap: 0.81
• Enterprise Value/Revenue: 11.27
• Enterprise Value/Gross Profit: 15.34
• Enterprise Value/Ebitda: 50.65
• 1Y Price Target: $213.13
• Price Target Upside: 25.97% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 30
• EPS Forecast (FY): 3.7
• Revenue Forecast (FY): $11.27B

• Rating: 74 Outperform
• Price Target: $185.00 ▲(9.34% Upside)
• Action: Reiterated Date: 03/12/26
• Date: Action: Reiterated 03/12/26

The score is driven primarily by strong financial quality (profitability improvement, low leverage, and robust free cash flow) and supportive earnings guidance (high margins and strong ARR/RPO growth outlook). These positives are tempered by weak-to-mixed technicals (below key longer-term moving averages with negative MACD) and a demanding valuation (high P/E with no dividend yield provided).

Positive Factors

Strong cash generation and free cash flow

Sustained, high free cash flow provides durable financial flexibility to fund R&D, platform investments, targeted M&A, and shareholder returns without stressing the balance sheet. Reliable cash conversion improves resilience through cycles and supports strategic long-term growth initiatives.

High ARR, platformization, and customer retention

High recurring ARR and strong platform adoption create durable revenue visibility and customer stickiness. 119% net retention and rising platformizations enable efficient cross-sell, lower churn, and long-term upsell economics that sustain margins and lifetime customer value.

Strategic M&A expanding identity and observability capabilities

Integrating CyberArk (identity) and Chronosphere (observability) fills strategic product gaps, broadens addressable market, and enhances platform defensibility for AI-era threats. If integrated well, these assets strengthen cross-product value and long-term competitive positioning.

Negative Factors

Sharply slower TTM revenue growth

A marked deceleration in top-line growth undermines operating leverage and makes future margin expansion and growth targets harder to achieve organically. Slower organic growth increases reliance on execution, pricing, or M&A to sustain investor expectations over the medium term.

Acquisition-driven growth, dilution and integration complexity

Heavy reliance on M&A to meet ARR and revenue targets raises dilution and creates execution risk. Large, near-term integration demands can divert management and engineering, complicate financials, and introduce uncertainty around realized synergies and long-term organic momentum.

Margin mix pressure and supply-chain cost headwinds

Shifts toward lower-margin services and periodic hardware cost inflation can compress gross margins absent offsetting software mix gains or price actions. Persistent margin pressure risks undermining recent profitability improvements and could constrain free cash flow expansion.

Palo Alto Networks Business Overview & Revenue Model

Company Description

Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The company offers firewall appliances and software; Panorama, a security management solution for the control of firewall appliances and software deployed on an end-customer's network and instances in public or private cloud environments, as a virtual or a physical appliance; and virtual system upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, uniform resource locator filtering, laptop and mobile device protection, and firewall; and DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention. In addition, the company offers cloud security, secure access, security analytics and automation, and threat intelligence and cyber security consulting; professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. Palo Alto Networks, Inc. sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. The company was incorporated in 2005 and is headquartered in Santa Clara, California.

How the Company Makes Money

Palo Alto Networks makes money primarily by selling cybersecurity subscriptions and support tied to its software platforms and security services. A significant portion of revenue is generated from recurring subscriptions, including term-based licenses and cloud-delivered security services for capabilities such as threat prevention, secure access, cloud workload/application protection, and security analytics/automation across its platform families (Strata, Prisma, Cortex). In addition to subscriptions, the company earns revenue from support and maintenance (e.g., technical support, updates, and related customer entitlements) that accompany its offerings. Palo Alto Networks also generates revenue from product sales, which historically include appliances and related on-premises deployments, typically paired with subscription and support contracts. Professional services (such as consulting, implementation, and training) contribute additional revenue but are not the primary driver relative to subscriptions and support. The company sells through a mix of direct sales and channel partners, including resellers, distributors, managed security service providers, cloud marketplaces, and technology alliances that help deliver and integrate its offerings; specific partnership contribution details are null.

Palo Alto Networks Financial Statement Overview

Summary

Strong overall fundamentals: high gross margin (~73.5%), improved profitability (TTM EBIT ~13.3%, net margin ~13.0%), conservatively financed balance sheet (TTM debt-to-equity ~0.04), and standout cash generation (TTM OCF ~$3.97B; FCF ~$4.07B with FCF tracking earnings). Main risk is the sharp slowdown in TTM revenue growth (3.5%) and some year-to-year margin variability.

Income Statement

Results show a clear profitability step-up versus earlier years: TTM (Trailing-Twelve-Months) revenue is $9.89B with strong gross margin (~73.5%) and solid operating profitability (EBIT margin ~13.3%). Net margin is healthy (~13.0%) and materially improved from losses in 2021–2022. The main watch-out is the sharp deceleration in revenue growth in TTM (3.5%) versus prior annual growth rates (mid-teens to ~30%), and some variability in margins year-to-year (notably the unusually high net margin in 2024).

Balance Sheet

Balance sheet strength improved dramatically: leverage is now very low with TTM debt-to-equity ~0.04 (total debt $372M vs equity $9.39B), and equity has grown meaningfully from earlier periods. Returns on equity are solid in TTM (~14.8%) with much lower financial risk than 2021–2023, when leverage was significantly higher (including very high debt-to-equity in 2022). The key risk is historical volatility in capital structure and returns, but the current positioning is conservatively financed.

Cash Flow

Cash generation is a standout: TTM (Trailing-Twelve-Months) operating cash flow is $3.97B and free cash flow is $4.07B, with strong growth in TTM free cash flow (3.27). Free cash flow closely tracks earnings (free cash flow to net income ~0.99), supporting earnings quality. One caution is that operating cash flow as a share of revenue appears moderate (coverage ratio ~0.50), though the absolute level of cash flow remains robust and consistently positive across all periods shown.

Breakdown	TTM	Jul 2025	Jul 2024	Jul 2023	Jul 2022	Jul 2021
Income Statement
Total Revenue	9.89B	9.22B	8.03B	6.89B	5.50B	4.26B
Gross Profit	7.27B	6.77B	5.97B	4.98B	3.78B	2.98B
EBITDA	2.20B	1.94B	1.28B	869.00M	95.60M	-46.60M
Net Income	1.28B	1.13B	2.58B	439.70M	-267.00M	-498.90M
Balance Sheet
Total Assets	24.98B	23.58B	19.99B	14.50B	12.25B	10.24B
Cash, Cash Equivalents and Short-Term Investments	4.54B	2.90B	2.58B	2.39B	3.63B	2.90B
Total Debt	372.00M	338.20M	1.34B	2.27B	3.95B	3.54B
Total Liabilities	15.59B	15.75B	14.82B	12.75B	12.04B	9.48B
Stockholders Equity	9.39B	7.82B	5.17B	1.75B	210.00M	763.60M
Cash Flow
Free Cash Flow	4.07B	3.47B	3.10B	2.63B	1.79B	1.39B
Operating Cash Flow	3.97B	3.72B	3.26B	2.78B	1.98B	1.50B
Investing Cash Flow	-1.61B	-2.20B	-1.51B	-2.03B	-933.40M	-1.48B
Financing Cash Flow	-433.00M	-778.90M	-1.34B	-1.73B	-806.60M	-1.10B

Palo Alto Networks Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 169.19
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Neutral. The current price of 169.19 is above the 20-day moving average (MA) of 157.07, below the 50-day MA of 169.49, and below the 200-day MA of 189.94, indicating a neutral trend. The MACD of 0.60 indicates Negative momentum. The RSI at 59.02 is Neutral, neither overbought nor oversold. The STOCH value of 79.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PANW.

Palo Alto Networks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PANW	74 Outperform	$138.06B	71.18	15.49%	―	15.30%	-60.71%
FTNT	72 Outperform	$61.53B	31.84	123.64%	―	14.78%	22.52%
CHKP	69 Neutral	$16.53B	18.84	36.62%	―	6.31%	25.27%
CRWD	69 Neutral	$109.87B	-686.05	-4.68%	―	22.05%	-341.24%
ZS	66 Neutral	$25.08B	-232.70	-3.48%	―	23.24%	-8.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Palo Alto Networks Corporate Events

Palo Alto Networks Adds $1 Billion to Share Buyback

Palo Alto Networks, Inc., a leading cybersecurity provider of network and cloud security solutions, serves enterprises and public-sector customers globally with platforms designed to protect digital infrastructure and data across complex IT environments.

On March 10, 2026, the company’s board authorized an additional $1.0 billion stock repurchase, expanding a buyback program that had fully utilized its prior $4.1 billion capacity as of March 6, 2026. Between February 20 and February 24, 2026, Palo Alto Networks repurchased $1.0 billion of stock, or about 6.8 million shares at an average price of $147.69, and may continue opportunistic buybacks through December 31, 2026, potentially supporting earnings per share and signaling confidence in its financial position to shareholders.

The most recent analyst rating on (PANW) stock is a Buy with a $185.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks Completes CyberArk Acquisition, Expands Identity Security

On February 11, 2026, Palo Alto Networks completed its acquisition of Israeli identity-security specialist CyberArk, making CyberArk a wholly owned subsidiary and folding its 0.00% Convertible Senior Notes due 2030 into a new structure guaranteed by Palo Alto Networks and exchangeable into Palo Alto Networks shares and cash. The company also assumed CyberArk’s capped call transactions, will maintain CyberArk’s identity-security platform as a standalone offering while integrating its capabilities into Palo Alto Networks’ broader ecosystem, and plans a secondary listing on the Tel Aviv Stock Exchange under the CYBR ticker, moves that deepen its identity-security pillar, expand its Israeli footprint and could reinforce its competitive position in securing AI-era human, machine and agentic identities.

Under the merger terms, CyberArk shareholders are entitled to receive $45 in cash plus 2.2005 Palo Alto Networks shares for each CyberArk share, while existing customers of both companies are promised continuity of service and an accelerated product roadmap as the combined group targets faster response to identity-driven breaches and the elimination of “identity silos” across hybrid cloud environments. By tying CyberArk’s privileged-access and identity-security capabilities to its established network and security-operations platforms, Palo Alto Networks is positioning itself as a more comprehensive provider of consolidated cybersecurity solutions at a time when identity-based attacks dominate breach statistics and machine identities vastly outnumber human users.

The most recent analyst rating on (PANW) stock is a Buy with a $220.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks Completes Chronosphere Acquisition to Boost AI Security

On January 29, 2026, Palo Alto Networks completed its acquisition of Chronosphere, a cloud-native observability specialist recognized in Gartner’s 2025 Magic Quadrant for Observability Platforms, folding it into the company as a wholly owned subsidiary to unify observability and security for AI-driven digital operations. The deal strengthens Palo Alto Networks’ position in AI-era cybersecurity by pairing its Cortex platform, including Cortex AgentiX and XSIAM, with Chronosphere’s real-time visibility and telemetry pipeline capabilities, enabling customers to monitor and secure massive data volumes more efficiently, reduce observability-related data and infrastructure costs, and move toward more autonomous, AI-driven operations without proportionally increasing security spend.

The most recent analyst rating on (PANW) stock is a Buy with a $255.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.