Palo Alto Networks (PANW) AI Stock Analysis

• Market Cap: $115.60B
• Dividend Yield: N/A
• Average Volume (3M): 12.79M
• Price to Earnings (P/E): 80.1
• Beta (1Y): 1.29
• 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: 20,319,145
• 30 Day Avg. Volume: 12,785,161
• 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: 0.84
• Enterprise Value/Revenue: 9.82
• Enterprise Value/Gross Profit: 13.36
• Enterprise Value/Ebitda: 44.13
• 1Y Price Target: $214.72
• Price Target Upside: 43.72% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 28
• EPS Forecast (FY): 3.72
• Revenue Forecast (FY): $11.15B

• Rating: 72 Outperform
• Price Target: $181.00 ▲(21.15% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven by strong financial quality (profitability improvement, low leverage, and robust free cash flow) and supportive earnings guidance/momentum in core platforms. The main offsets are weak technicals (price below major moving averages with negative MACD) and a rich valuation (high P/E), alongside near-term M&A integration and dilution risks noted on the earnings call.

Positive Factors

Strong free cash flow

Sustained, large free cash flow ($4.07B TTM) provides durable internal funding for R&D, platform expansion, and M&A without heavy reliance on external capital. This strengthens resiliency across economic cycles and supports long-term reinvestment and strategic optionality over the next 2–6 months.

Conservative balance sheet

Very low leverage and a strengthened equity base reduce financial risk and preserve flexibility to execute strategy, absorb acquisition costs or support guarantees tied to transactions. This conservative capital structure supports durable investment and lowers refinancing vulnerability over the medium term.

Recurring ARR and platform momentum

High-growth, subscription ARR ($6.33B NGS ARR, strong organic growth) and multi-product platformization drive durable recurring revenue, high net retention and embedded customer stickiness. This structural mix favors predictable revenues and cross-sell upside across SASE, XSIAM and AI security over coming quarters.

Negative Factors

Acquisition-driven growth and dilution

Material portion of near-term ARR and revenue is M&A-sourced, with sizeable share issuance and cash payments. That creates lasting dilution and complicates EPS comparability, increasing dependency on integration success to justify inorganic growth and sustain reported ARR momentum.

Integration and execution risk

Back-to-back large acquisitions (Chronosphere, CyberArk) raise persistent integration complexity across product roadmaps, GTM motions and engineering resources. Execution friction could slow cross-sell, delay roadmap synergies, and impair margins if integration demands distract core operations over the medium term.

Slowing organic revenue growth

A marked slowdown in trailing revenue growth (TTM ~3.5%) signals weaker organic top-line momentum. That increases reliance on product mix improvement or M&A to meet growth targets and can compress long-term upside in operating leverage if organic demand fails to re-accelerate.

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

Strong overall fundamentals supported by high gross margins (~73.5%), improved profitability (TTM EBIT margin ~13.3%, net margin ~13.0%), a conservatively financed balance sheet (TTM debt-to-equity ~0.04), and standout cash generation (TTM OCF ~$3.97B; FCF ~$4.07B with solid earnings quality). Key watch-out 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: Negative
• Last Price: 149.40
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 149.4 is below the 20-day moving average (MA) of 161.61, below the 50-day MA of 176.54, and below the 200-day MA of 191.91, indicating a bearish trend. The MACD of -9.59 indicates Positive momentum. The RSI at 28.84 is Positive, neither overbought nor oversold. The STOCH value of 8.98 is Positive, 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
PANW	72 Outperform	$115.60B	80.15	16.26%	―	15.30%	-60.71%
FTNT	72 Outperform	$55.94B	31.88	135.72%	―	14.78%	22.52%
CHKP	69 Neutral	$16.37B	15.86	37.27%	―	6.31%	25.27%
ZS	62 Neutral	$23.82B	-593.37	-2.41%	―	23.24%	-8.83%
CRWD	62 Neutral	$88.30B	-287.57	-8.88%	―	22.05%	-341.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Palo Alto Networks Corporate Events

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.

Palo Alto Networks Shareholders Approve Key Amendments

On December 9, 2025, Palo Alto Networks held its Annual Meeting of Shareholders where several key decisions were made. Shareholders approved an amendment to the 2021 Equity Incentive Plan, increasing the number of shares reserved for issuance by 10 million. Additionally, the election of Class II directors and the ratification of Ernst & Young LLP as the independent accounting firm were confirmed. However, a proposal on share repurchases was not approved, while a proposal for annual director elections was passed.

The most recent analyst rating on (PANW) stock is a Buy with a $218.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks Grants Significant Equity Awards

On November 10, 2025, Palo Alto Networks granted additional equity awards totaling 2,735,105 shares under its 2021 Equity Incentive Plan, with potential payouts reaching 2,958,667 shares. This move leaves 24,341,864 shares available for future grants, highlighting the company’s strategic focus on incentivizing its workforce and maintaining a robust equity compensation framework.

The most recent analyst rating on (PANW) stock is a Hold with a $203.00 price target. To see the full list of analyst forecasts on Palo Alto Networks stock, see the PANW Stock Forecast page.

Palo Alto Networks 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.