Palo Alto Networks (PANW) AI Stock Analysis

• Market Cap: $132.07B
• Dividend Yield: N/A
• Average Volume (3M): 6.45M
• Price to Earnings (P/E): 119.3
• 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: 6,791,382
• 30 Day Avg. Volume: 6,450,745
• 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: 1.11
• Enterprise Value/Revenue: 15.36
• Enterprise Value/Gross Profit: 20.91
• Enterprise Value/Ebitda: 73.83
• 1Y Price Target: $232.43
• Price Target Upside: 22.66% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 36
• EPS Forecast (FY): 3.86
• Revenue Forecast (FY): $10.53B

• Rating: 73 Outperform
• Price Target: $218.00 ▲(15.05% Upside)

Palo Alto Networks' strong financial performance and positive earnings call sentiment are the primary drivers of its stock score. However, technical indicators suggest potential bearish momentum, and the high P/E ratio indicates overvaluation, which tempers the overall score.

Positive Factors

Revenue Growth

Strong revenue growth indicates expanding market presence and successful product adoption, supporting long-term business sustainability.

Strategic Acquisitions

Strategic acquisitions enhance product offerings and competitive positioning, driving future growth and innovation in cybersecurity.

Cash Flow Generation

Robust cash flow generation provides financial flexibility to invest in growth opportunities and withstand market fluctuations.

Negative Factors

Integration Challenges

Integration challenges may impact operational efficiency and delay expected synergies, affecting short to medium-term performance.

Pressure on Net Profit Margins

Decreasing net profit margins could signal cost pressures, potentially affecting profitability unless addressed through cost management.

Emerging AI Threats

The evolving threat landscape from AI requires continuous innovation and investment in security solutions, posing ongoing challenges.

Palo Alto Networks Business Overview & Revenue Model

Company Description

Palo Alto Networks (PANW) is a global cybersecurity leader that provides a comprehensive suite of security solutions designed to protect digital environments. The company operates in the cybersecurity sector, focusing on areas such as network security, cloud security, endpoint protection, and threat intelligence. Its core products include the Next-Generation Firewall, Prisma Cloud, Cortex XDR, and various security subscription services that help organizations safeguard their data and applications against cyber threats.

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 demonstrates strong financial performance with consistent revenue growth and robust cash flow. The company maintains a low debt-to-equity ratio, indicating financial stability. However, slight pressure on net profit margins suggests room for improvement.

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: 189.49
• 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 Negative. The current price of 189.49 is below the 20-day moving average (MA) of 189.98, below the 50-day MA of 201.53, and below the 200-day MA of 192.30, indicating a bearish trend. The MACD of -3.62 indicates Negative momentum. The RSI at 42.96 is Neutral, neither overbought nor oversold. The STOCH value of 42.61 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	$20.48B	20.76	34.19%	―	6.31%	25.27%
PANW	73 Outperform	$132.07B	119.32	15.33%	―	15.30%	-60.71%
FTNT	71 Outperform	$60.79B	33.21	228.04%	―	14.78%	22.52%
CRWD	67 Neutral	$121.80B	-379.01	-8.88%	―	22.05%	-341.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ZS	60 Neutral	$37.01B	-873.93	-2.41%	―	23.24%	-8.83%
CYBR	52 Neutral	$22.81B	―	-12.73%	―	43.26%	-1651.82%

Palo Alto Networks Corporate Events

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.

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.

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.

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.

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.