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Palo Alto Networks Rises 16% in a Month: Time to Hold or Book Profits?
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Key Takeaways
Palo Alto Networks gained 15.6% in a month, topping peers like Fortinet, Qualys and Okta.
AI innovations, platformization and large deals boosted PANW's revenue and customer growth.
Slowing NGS ARR growth and premium valuation raise concerns about sustaining momentum.
Palo Alto Networks, Inc. (PANW - Free Report) shares have gained 15.6% in the past month, outperforming the Zacks Security industry’s growth of 6.5%. The stock has also outperformed its industry peers and competitors, including Fortinet (FTNT - Free Report) , Qualys (QLYS - Free Report) and Okta Inc. (OKTA - Free Report) . In the past month, shares of Fortinet, Qualys and Okta have gained 5.7%, 5.5%, and 3.4%, respectively.
The outperformance of Palo Alto Networks’ share price raises the question: Should investors continue holding the stock or book profits?
One-Month Price Return Performance
Image Source: Zacks Investment Research
Positive Industry Tailwinds Boost PANW’s Prospects
Palo Alto Networks is well-positioned to capitalize on the growing demand for advanced cybersecurity solutions. According to Fortune Business Insights, the global cybersecurity market is projected to expand from $193.73 billion in 2024 to $562.77 billion by 2032, representing a massive addressable market. As cyber threats become more sophisticated, enterprises are increasingly prioritizing multi-layered security platforms, which directly contribute to Palo Alto Networks’ strengths.
The company’s continued innovation in AI, automation and cloud security reinforces its competitive lead. AI is increasingly embedded in Palo Alto Networks’ offerings, which is helping it win multi-product deals through platforms like Cortex XSIAM and Prisma. Palo Alto Networks recently launched Prisma AI-Ready Security (Prisma AIRS), which aims to protect AI models from build to deployment across hybrid and multi-cloud setups. Just weeks after launch, Prisma AIRS has already built an eight-figure sales pipeline. Additionally, in the fourth quarter of fiscal 2025, Prisma AIRS secured an eight-figure deal with a global professional services company.
Palo Alto Networks’ transition to a platform-based model has been a game-changer. By bundling multiple security products into a comprehensive cybersecurity platform, the company generates recurring revenue streams, boosting financial stability and customer stickiness. Large platform commitments are also increasing. During the fourth quarter, customers with more than $5 million and $10 million ARR grew about 50% year over year, while those above $20 million ARR increased 80% year over year. The company also closed a $100 million-plus deal with a global consulting firm that is now fully platformized, contributing $50 million in ARR.
XSIAM, Palo Alto Networks’ AI-based Security Operations Centre platform, continued rapid adoption. It now has around 400 customers, most generating more than $1 million in ARR. Moreover, around 25% of these customers were Global 2000 companies, which shows strong adoption among large enterprises. During the fourth quarter, a leading European bank signed a $60 million-plus deal, which included the adoption of XSIAM. The bank wanted to reduce security complexity and manage costs, and as a result, the customer now utilizes three Palo Alto Networks platforms.
Additionally, the pending acquisition of CyberArk would strengthen Palo Alto Networks’ foothold in a category where it currently lacks scale. PANW has already built out capabilities in endpoint and network security through its Cortex and Prisma platforms. However, identity-driven threat protection has remained a weaker link. By integrating CyberArk’s capabilities, Palo Alto Networks would be able to deliver a more comprehensive and unified platform that spans cloud, endpoint, network and identity protection.
PANW’s Sluggish Sales Growth Remains a Key Concern
Palo Alto Networks is experiencing a slowdown in its sales growth. Notably, the company’s revenue growth rate has been in the mid-teen percentage range over the past year, a sharp contrast from the mid-20s percentage in fiscal 2023.
This deceleration is expected to continue into fiscal 2026, with the company forecasting full-year revenue growth of just 14% in the range of $10.475-$10.525 billion. In the recently reported financial results for the fourth quarter of fiscal 2025, revenues grew 16% year over year. The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates revenue growth to remain in the mid-teen percentage range.
Image Source: Zacks Investment Research
Another concern is the slowing growth of Next-Generation Security (NGS) annual recurring revenues (ARR), a key metric for Palo Alto Networks' long-term financial health. The company has reported six consecutive quarters of decelerating NGS ARR growth, with fiscal 2026 projections suggesting a further slowdown to 26-27% growth compared to the 45%+ growth in previous years. While this is still impressive, the decelerating momentum has disappointed investors, considering the rising demand for cloud security and AI-powered solutions.
Image Source: Palo Alto Networks, Inc.
PANW Stock Trades at Premium Valuation
Palo Alto Networks is currently trading at a higher price-to-sales (P/S) multiple compared to the industry. PANW’s forward 12-month P/S ratio sits at 12.27X, higher than the industry’s forward 12-month P/S ratio of 12.03X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Palo Alto Networks stock also trades at a higher P/S multiple compared with other industry peers, including Fortinet, Qualys and Okta. At present, Fortinet, Qualys and Okta have P/S multiples of 8.83X, 7.1X and 5.27X, respectively.
Conclusion: Hold PANW Stock for Now
Palo Alto Networks remains a leader in cybersecurity, with a strong long-term growth trajectory, continued AI-driven innovation and a shift toward a more predictable recurring revenue model. However, slowing revenue and NGS ARR growth rates warrant a cautious approach to the stock. So, it is prudent for existing investors to remain invested, while new investors should wait for a better entry point.
Image: Bigstock
Palo Alto Networks Rises 16% in a Month: Time to Hold or Book Profits?
Key Takeaways
Palo Alto Networks, Inc. (PANW - Free Report) shares have gained 15.6% in the past month, outperforming the Zacks Security industry’s growth of 6.5%. The stock has also outperformed its industry peers and competitors, including Fortinet (FTNT - Free Report) , Qualys (QLYS - Free Report) and Okta Inc. (OKTA - Free Report) . In the past month, shares of Fortinet, Qualys and Okta have gained 5.7%, 5.5%, and 3.4%, respectively.
The outperformance of Palo Alto Networks’ share price raises the question: Should investors continue holding the stock or book profits?
One-Month Price Return Performance
Image Source: Zacks Investment Research
Positive Industry Tailwinds Boost PANW’s Prospects
Palo Alto Networks is well-positioned to capitalize on the growing demand for advanced cybersecurity solutions. According to Fortune Business Insights, the global cybersecurity market is projected to expand from $193.73 billion in 2024 to $562.77 billion by 2032, representing a massive addressable market. As cyber threats become more sophisticated, enterprises are increasingly prioritizing multi-layered security platforms, which directly contribute to Palo Alto Networks’ strengths.
The company’s continued innovation in AI, automation and cloud security reinforces its competitive lead. AI is increasingly embedded in Palo Alto Networks’ offerings, which is helping it win multi-product deals through platforms like Cortex XSIAM and Prisma. Palo Alto Networks recently launched Prisma AI-Ready Security (Prisma AIRS), which aims to protect AI models from build to deployment across hybrid and multi-cloud setups. Just weeks after launch, Prisma AIRS has already built an eight-figure sales pipeline. Additionally, in the fourth quarter of fiscal 2025, Prisma AIRS secured an eight-figure deal with a global professional services company.
Palo Alto Networks’ transition to a platform-based model has been a game-changer. By bundling multiple security products into a comprehensive cybersecurity platform, the company generates recurring revenue streams, boosting financial stability and customer stickiness. Large platform commitments are also increasing. During the fourth quarter, customers with more than $5 million and $10 million ARR grew about 50% year over year, while those above $20 million ARR increased 80% year over year. The company also closed a $100 million-plus deal with a global consulting firm that is now fully platformized, contributing $50 million in ARR.
XSIAM, Palo Alto Networks’ AI-based Security Operations Centre platform, continued rapid adoption. It now has around 400 customers, most generating more than $1 million in ARR. Moreover, around 25% of these customers were Global 2000 companies, which shows strong adoption among large enterprises. During the fourth quarter, a leading European bank signed a $60 million-plus deal, which included the adoption of XSIAM. The bank wanted to reduce security complexity and manage costs, and as a result, the customer now utilizes three Palo Alto Networks platforms.
Additionally, the pending acquisition of CyberArk would strengthen Palo Alto Networks’ foothold in a category where it currently lacks scale. PANW has already built out capabilities in endpoint and network security through its Cortex and Prisma platforms. However, identity-driven threat protection has remained a weaker link. By integrating CyberArk’s capabilities, Palo Alto Networks would be able to deliver a more comprehensive and unified platform that spans cloud, endpoint, network and identity protection.
PANW’s Sluggish Sales Growth Remains a Key Concern
Palo Alto Networks is experiencing a slowdown in its sales growth. Notably, the company’s revenue growth rate has been in the mid-teen percentage range over the past year, a sharp contrast from the mid-20s percentage in fiscal 2023.
This deceleration is expected to continue into fiscal 2026, with the company forecasting full-year revenue growth of just 14% in the range of $10.475-$10.525 billion. In the recently reported financial results for the fourth quarter of fiscal 2025, revenues grew 16% year over year. The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates revenue growth to remain in the mid-teen percentage range.
Image Source: Zacks Investment Research
Another concern is the slowing growth of Next-Generation Security (NGS) annual recurring revenues (ARR), a key metric for Palo Alto Networks' long-term financial health. The company has reported six consecutive quarters of decelerating NGS ARR growth, with fiscal 2026 projections suggesting a further slowdown to 26-27% growth compared to the 45%+ growth in previous years. While this is still impressive, the decelerating momentum has disappointed investors, considering the rising demand for cloud security and AI-powered solutions.
Image Source: Palo Alto Networks, Inc.
PANW Stock Trades at Premium Valuation
Palo Alto Networks is currently trading at a higher price-to-sales (P/S) multiple compared to the industry. PANW’s forward 12-month P/S ratio sits at 12.27X, higher than the industry’s forward 12-month P/S ratio of 12.03X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Palo Alto Networks stock also trades at a higher P/S multiple compared with other industry peers, including Fortinet, Qualys and Okta. At present, Fortinet, Qualys and Okta have P/S multiples of 8.83X, 7.1X and 5.27X, respectively.
Conclusion: Hold PANW Stock for Now
Palo Alto Networks remains a leader in cybersecurity, with a strong long-term growth trajectory, continued AI-driven innovation and a shift toward a more predictable recurring revenue model. However, slowing revenue and NGS ARR growth rates warrant a cautious approach to the stock. So, it is prudent for existing investors to remain invested, while new investors should wait for a better entry point.
Currently, Palo Alto Networks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.