We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Palo Alto Networks Rises 19.5% YTD: Time to Hold or Book Profits?
Read MoreHide Full Article
Key Takeaways
Palo Alto Networks shares are up 19.5% YTD, underperforming the Security industry's 20.6% growth.
Revenues and NGS ARR growth are slowing, with fiscal 2026 sales projected to rise about 14%.
AI innovations like Cortex XSIAM, Prisma AIRS and a planned CyberArk deal support long-term growth.
Palo Alto Networks, Inc. ((PANW - Free Report) ) shares have gained 19.5% year to date, underperforming the Zacks Security industry’s growth of 20.6%. The stock has also underperformed its industry peers and competitors, including CyberArk ((CYBR - Free Report) ), CrowdStrike ((CRWD - Free Report) ) andZscaler((ZS - Free Report) ). Year to date, shares of CyberArk, CrowdStrike and Zscaler have gained 54.3%, 49% and 73.8%, respectively.
The underperformance of Palo Alto Networks’ share price raises the question: Should investors buy, hold or sell PANW stock?
YTD Price Return Performance
Image Source: Zacks Investment Research
Palo Alto Networks Suffers From Slowing Sales Growth
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 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. Furthermore, for fiscal 2026, Palo Alto Networks expects NGS ARR in the range of $7.00-$7.10 billion, 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. However, for investors, not everything is gloom and doom.
Image Source: Palo Alto Networks, Inc.
Palo Alto Networks Gains From Positive Industry Tailwinds
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 PANW’s strengths.
The company’s continued innovation in AI, automation and cloud security reinforces its competitive lead. AI is increasingly embedded into Palo Alto Networks’ offerings, which is helping it win multi-product deals through platforms like Cortex XSIAM and Prisma AI-Ready Security (Prisma AIRS).
As enterprises race to adopt generative AI, the company sees new attack surfaces forming, both in how organizations build AI and in how employees use third-party AI tools. Prisma AIRS is meant to close those gaps, providing visibility, data loss prevention, and compliance safeguards. Prisma AIRS aims to protect AI models from build to deployment across hybrid and multi-cloud setups. Moreover, just weeks after launch, Prisma AIRS has already built an eight-figure sales pipeline.
On its fourth-quarter fiscal 2025 earnings call, management described Cortex XSIAM as the fastest-growing product in its history. Palo Alto Networks ended the fourth quarter with about 400 customers being deployed on XSIAM, with average annual recurring revenue (ARR) per customer of more than $1 million. Moreover, around 25% of these customers were Global 2000 companies, which signifies strong adoption among large enterprises. Palo Alto Networks also closed a large deal in the fourth quarter. A leading European bank signed a $60 million-plus deal, which included adopting XSIAM. The bank wanted to reduce security complexity and manage costs, and as a result, the customer now uses 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.
Valuation: PANW Trades Below Its Peers
Palo Alto Networks currently trades at par with the security industry.
Palo Alto Networks is currently at a price-to-sales (P/S) multiple, which is in line with the industry. PANW’s forward 12-month P/S ratio sits at 13.21X compared with the industry’s forward 12-month P/S ratio of 13.22X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Nonetheless, PANW stock trades at a lower P/S multiple compared with other industry peers, including CyberArk, CrowdStrike and Zscaler. Currently, CyberArk, CrowdStrike and Zscaler have P/S multiples of 17.10X, 23.37X and 14.68X, 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.
Despite these headwinds, Palo Alto Networks’ reasonable valuation offers some downside protection. This discounted pricing makes PANW an attractive long-term hold, particularly for investors seeking exposure to cybersecurity growth at a fair price.
Image: Bigstock
Palo Alto Networks Rises 19.5% YTD: Time to Hold or Book Profits?
Key Takeaways
Palo Alto Networks, Inc. ((PANW - Free Report) ) shares have gained 19.5% year to date, underperforming the Zacks Security industry’s growth of 20.6%. The stock has also underperformed its industry peers and competitors, including CyberArk ((CYBR - Free Report) ), CrowdStrike ((CRWD - Free Report) ) and Zscaler ((ZS - Free Report) ). Year to date, shares of CyberArk, CrowdStrike and Zscaler have gained 54.3%, 49% and 73.8%, respectively.
The underperformance of Palo Alto Networks’ share price raises the question: Should investors buy, hold or sell PANW stock?
YTD Price Return Performance
Image Source: Zacks Investment Research
Palo Alto Networks Suffers From Slowing Sales Growth
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 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. Furthermore, for fiscal 2026, Palo Alto Networks expects NGS ARR in the range of $7.00-$7.10 billion, 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. However, for investors, not everything is gloom and doom.
Image Source: Palo Alto Networks, Inc.
Palo Alto Networks Gains From Positive Industry Tailwinds
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 PANW’s strengths.
The company’s continued innovation in AI, automation and cloud security reinforces its competitive lead. AI is increasingly embedded into Palo Alto Networks’ offerings, which is helping it win multi-product deals through platforms like Cortex XSIAM and Prisma AI-Ready Security (Prisma AIRS).
As enterprises race to adopt generative AI, the company sees new attack surfaces forming, both in how organizations build AI and in how employees use third-party AI tools. Prisma AIRS is meant to close those gaps, providing visibility, data loss prevention, and compliance safeguards. Prisma AIRS aims to protect AI models from build to deployment across hybrid and multi-cloud setups. Moreover, just weeks after launch, Prisma AIRS has already built an eight-figure sales pipeline.
On its fourth-quarter fiscal 2025 earnings call, management described Cortex XSIAM as the fastest-growing product in its history. Palo Alto Networks ended the fourth quarter with about 400 customers being deployed on XSIAM, with average annual recurring revenue (ARR) per customer of more than $1 million. Moreover, around 25% of these customers were Global 2000 companies, which signifies strong adoption among large enterprises. Palo Alto Networks also closed a large deal in the fourth quarter. A leading European bank signed a $60 million-plus deal, which included adopting XSIAM. The bank wanted to reduce security complexity and manage costs, and as a result, the customer now uses 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.
Valuation: PANW Trades Below Its Peers
Palo Alto Networks currently trades at par with the security industry.
Palo Alto Networks is currently at a price-to-sales (P/S) multiple, which is in line with the industry. PANW’s forward 12-month P/S ratio sits at 13.21X compared with the industry’s forward 12-month P/S ratio of 13.22X.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Nonetheless, PANW stock trades at a lower P/S multiple compared with other industry peers, including CyberArk, CrowdStrike and Zscaler. Currently, CyberArk, CrowdStrike and Zscaler have P/S multiples of 17.10X, 23.37X and 14.68X, 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.
Despite these headwinds, Palo Alto Networks’ reasonable valuation offers some downside protection. This discounted pricing makes PANW an attractive long-term hold, particularly for investors seeking exposure to cybersecurity growth at a fair price.
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.