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Palo Alto Networks Inc. (PANW - Free Report) and VMware, Inc. (VMW - Free Report) yesterday announced the expansion of their strategic relationships to address cloud security needs of the latter’s customers. Per the agreement, Palo Alto Networks’ Next-Generation Security Platform will now be available to customers of VMware Cloud on Amazon’s (AMZN - Free Report) cloud computing wing, Amazon Web Services (AWS).

Notably, VMware launched its VMware Cloud on AWS yesterday, with initial availability in the latter’s West (Oregon) region. The latest move is in line with the strategic partnership agreement between the two companies entered last year.

Last year, these two entities agreed to come together to offer an integrated hybrid cloud solution, functioning more like a software-defined data center (SDDC). This contract will enable users to run VMware software (vSphere, Virtual SAN and NSX) on the bare-metal infrastructure from AWS apart from the internal servers.

However, in view of the persistent rise in cyber crime, there is a prominent need for integrated security solution which can deliver consistent and automated protection against cyber threats. As Palo Alto Networks is one of the world’s leading network security solution provider, VMware’s decision of picking its solution to address the need of cloud security issue is wise, in our opinion.

Through the new collaboration, Palo Alto Networks will combine its security platform with VMware’s software platform, which provides private cloud-based service to make the cloud-computing environment more secure, simple, flexible, and efficient.

This deal will better equip organizations to handle private cloud technology and control business applications securely. As VMware remains one of the leading companies in the virtualization and cloud computing space, we believe Palo Alto Networks will gain significantly from this collaboration.

Due to the rapid adoption of cloud computing technologies, security and prevention of data loss have become the top priorities for enterprises in recent times. Per Gartner’s new report, worldwide spending on IT security will reach $101 billion in 2018 from $75 billion recorded in 2015.

Palo Alto Networks’ innovative product portfolio is well positioned to benefit from this significant growth over the long run. We believe the interoperability of the company’s Next-Generation Security Platform will help customers accelerate their transition to the cloud.

Currently, Palo Alto Networks carries a Zacks Rank #3 (Hold).

Notably, shares of Palo Alto Networks have underperformed the industry to which it belongs to in the year-to-date period. The stock has returned just 3.4%, while the industry has gained 16.8% in the said period.

A better-ranked stock in the same space is FireEye Inc. (FEYE - Free Report) , which has a Zacks Rank #2 (Buy). Its shares have outperformed the industry in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FireEye gained 21.5% in the aforementioned period and has long-term expected EPS growth rate of 16%.

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