Palo Alto Networks (PANW) AI Stock Analysis

• Market Cap: $130.85B
• Dividend Yield: N/A
• Average Volume (3M): 5.56M
• Price to Earnings (P/E): 119.1
• Beta (1Y): 1.38
• Revenue Growth: 15.30%
• EPS Growth: -60.71%
• Country: US
• Employees: 15,758
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.93
• Shares Outstanding: 697,000,000
• 10 Day Avg. Volume: 7,500,959
• 30 Day Avg. Volume: 5,560,596
• 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: 1.16
• Enterprise Value/Revenue: 15.93
• Enterprise Value/Gross Profit: 21.69
• Enterprise Value/Ebitda: 80.15
• 1Y Price Target: $232.14
• Price Target Upside: 22.26% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 35
• EPS Forecast (FY): 3.86
• Revenue Forecast (FY): $10.53B

• Rating: 68 Neutral
• Price Target: $199.00 ▲(4.80% Upside)

Palo Alto Networks' strong financial performance and positive earnings call are significant strengths, contributing to a solid overall score. However, bearish technical indicators and high valuation concerns weigh down the score. The company's strategic initiatives and growth potential are promising, but current market conditions and valuation present risks.

Positive Factors

Revenue Growth

Palo Alto Networks' consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term expansion.

Strategic Acquisitions

Strategic acquisitions enhance Palo Alto Networks' product offerings and competitive position, driving future growth and innovation.

Cash Flow Generation

Effective cash generation supports operational flexibility and investment in growth opportunities, ensuring financial stability.

Negative Factors

Net Profit Margin Decline

Declining net profit margins may impact profitability and limit reinvestment capacity, posing a challenge to sustaining growth.

Integration Challenges

Integration risks could affect operational efficiency and synergy realization, potentially impacting margins and strategic goals.

AI Threat Landscape

The evolving AI threat landscape necessitates continuous innovation and investment, potentially increasing operational costs and complexity.

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 generates revenue primarily through the sale of its cybersecurity products and services. The company's revenue model consists of several key streams: product sales, which include hardware and software licenses; subscription services, which provide ongoing security updates and threat intelligence; and support and maintenance services. A significant portion of its revenue comes from recurring subscription fees, reflecting the growing demand for continuous cybersecurity solutions. Additionally, Palo Alto Networks has formed strategic partnerships with cloud providers and technology companies, enhancing its market reach and integrating its solutions into broader IT ecosystems, which further contribute to its earnings.

Palo Alto Networks Financial Statement Overview

Summary

Palo Alto Networks shows strong financial performance with consistent revenue growth and robust cash flow. The company maintains a solid balance sheet with minimal leverage. However, there is slight pressure on net profit margins, indicating room for improvement in profitability.

Income Statement

Palo Alto Networks demonstrates strong revenue growth with a TTM revenue growth rate of 3.64%, indicating consistent expansion. The gross profit margin remains robust at 73.47%, reflecting efficient cost management. However, the net profit margin has slightly decreased to 11.69% from the previous annual report, suggesting some pressure on profitability. Overall, the company shows solid performance with room for improvement in net profitability.

Balance Sheet

The balance sheet is strong with a low debt-to-equity ratio of 0.04, indicating minimal leverage and financial stability. The return on equity is healthy at 14.85%, showcasing effective use of equity to generate profits. The equity ratio stands at 36.81%, reflecting a solid equity base. The company has significantly improved its financial position over the years, reducing debt and increasing equity.

Cash Flow

Cash flow metrics are impressive, with a free cash flow growth rate of 5.96% TTM, highlighting strong cash generation capabilities. The operating cash flow to net income ratio is 0.50, indicating efficient cash conversion. The free cash flow to net income ratio is 1.0, showing that the company is generating ample free cash flow relative to its net income. Overall, the cash flow position is robust and supports ongoing operations and growth.

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

Palo Alto Networks Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 189.88
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Negative. The current price of 189.88 is below the 20-day moving average (MA) of 200.06, below the 50-day MA of 206.68, and below the 200-day MA of 192.17, indicating a bearish trend. The MACD of -6.55 indicates Positive momentum. The RSI at 37.92 is Neutral, neither overbought nor oversold. The STOCH value of 37.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PANW.

Palo Alto Networks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHKP	76 Outperform	$20.27B	20.50	34.19%	―	6.31%	25.27%
FTNT	71 Outperform	$60.85B	33.69	228.04%	―	14.78%	22.52%
PANW	68 Neutral	$130.85B	119.07	15.33%	―	15.30%	-60.71%
CRWD	67 Neutral	$126.51B	―	-8.99%	―	23.46%	-270.07%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ZS	60 Neutral	$38.80B	―	-2.41%	―	23.24%	-8.83%
CYBR	52 Neutral	$22.87B	―	-12.73%	―	43.26%	-1651.82%

Palo Alto Networks Corporate Events

Palo Alto Networks’ Earnings Call Highlights Strategic Growth

Palo Alto Networks’ recent earnings call showcased a robust financial performance and strategic growth initiatives, underscoring a positive sentiment. The company highlighted its success in platformization, innovation, and strategic acquisitions, while also addressing emerging AI threats and integration challenges. Despite these challenges, Palo Alto Networks’ proactive measures and strategic vision position it well for future opportunities.

Palo Alto Networks Reports Strong Q1 2026 Growth

Palo Alto Networks, a global leader in AI-powered cybersecurity solutions, is dedicated to protecting digital environments through continuous innovation and platformization, serving over 70,000 organizations worldwide.

Palo Alto Networks to Acquire Chronosphere

On November 19, 2025, Palo Alto Networks announced its intent to acquire Chronosphere, a next-generation observability platform, as part of its strategy to enhance its data and security offerings in the AI era. Additionally, the company reported strong financial results for its fiscal first quarter 2026, with a 16% increase in revenue year-over-year to $2.5 billion and significant growth in its Next-Generation Security ARR. The company also extended its stock repurchase authorization and announced changes to its board of directors, reflecting its ongoing strategic initiatives to strengthen its market position.

The most recent analyst rating on (PANW) stock is a Buy with a $250.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks Appoints New Board Member

On November 18, 2025, Palo Alto Networks announced the retirement of Mary Pat McCarthy from its Board of Directors, effective January 23, 2026. McCarthy, who has been a director since 2016, stepped down from her role as chair of the Audit Committee but will remain a member until her retirement. Concurrently, the company appointed Mark Goodburn to the Board as a Class I director and chair of the Audit Committee. Goodburn brings extensive experience from his previous roles at KPMG International and is expected to contribute significantly to the company’s strategic growth and innovation efforts.

The most recent analyst rating on (PANW) stock is a Buy with a $250.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks Advances Merger with CyberArk

On July 30, 2025, Palo Alto Networks announced a merger agreement with CyberArk Software Ltd., with CyberArk to become a wholly owned subsidiary. The merger’s progress was marked by the early termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period on September 24, 2025, though it still awaits further regulatory approvals and shareholder consent.

The most recent analyst rating on (PANW) stock is a Buy with a $225.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks’ Earnings Call Highlights Robust Growth

Palo Alto Networks’ recent earnings call exuded a positive sentiment, underscored by strong financial performance and significant growth in key areas. The company reported notable achievements in revenue, ARR, and large deals, emphasizing its strategic focus on next-generation security and platformization. Despite facing challenges in inventory management and the competitive identity market, the highlights of the call clearly outweighed the lowlights, painting an optimistic picture for the company’s future.

Palo Alto Networks’ CyberArk Acquisition: Navigating Integration Challenges and Competitive Pressures

The acquisition of CyberArk by Palo Alto Networks is expected to significantly alter the company’s business landscape, introducing several incremental risks, including heightened competition. This expansion necessitates substantial integration efforts, which may divert senior management’s focus from daily operations and create uncertainty among employees, partners, and customers. The integration process poses challenges in aligning business practices and systems, potentially disrupting existing relationships and delaying the realization of anticipated synergies. Furthermore, entering a new product category could intensify competitive pressures, potentially impacting sales, operating costs, and overall financial performance.