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Is AI Security Becoming PANW's Biggest Long-Term Growth Opportunity?
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Key Takeaways
PANW's Prisma AIRS customer count more than tripled sequentially to over 100 customers in Q2.
Palo Alto Networks' Prisma AIRS bookings doubled sequentially with a nine-figure pipeline.
PANW's XSIAM platform surpassed $500M in ARR as AI-driven security demand accelerated.
Palo Alto Networks (PANW - Free Report) is seeing strong demand for AI security products as enterprises increase the use of AI models, AI applications and autonomous AI agents. Nowadays, enterprises are moving beyond AI experimentation and beginning to deploy AI into real business workflows. This trend is creating new security risks as AI agents, machine-to-machine activity and AI-powered applications increase the attack surface. Palo Alto Networks believes that this trend that could support long-term growth across multiple parts of its business.
Palo Alto Networks’ Prisma AIRS platform is gaining traction as companies look to secure AI deployments. Prisma AIRS helps customers protect AI models and AI applications across their lifecycle. During the second quarter, Prisma AIRS customer count more than tripled on a sequential basis to more than 100 customers. Further bookings for Prisma AIRS doubled on a sequential basis and the platform already has a nine-figure pipeline.
AI demand is also helping other Palo Alto Networks businesses. Software firewall ARR grew nearly 25% year over year in the second quarter, as customers secured AI-driven cloud environments. Further, XSIAM, Palo Alto Networks' AI-powered security operations center platform, crossed $500 million in ARR during the second quarter. Palo Alto Networks is also expanding its AI security capabilities through acquisitions like Koi, which focuses on securing AI-related activity at endpoints. The company believes traditional security tools lack visibility into AI-generated code, browser extensions and AI agents running on enterprise devices.
The above-mentioned factors show that as enterprises continue expanding AI deployments, PANW’s prospects are set to benefit as AI security continues to become a larger long-term growth opportunity for the company. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 22.5% and 19.7%, respectively.
How Competitors Fare Against PANW
Competitors like CrowdStrike (CRWD - Free Report) and SentinelOne (S - Free Report) are also gaining ground through platform expansion and AI innovation.
CrowdStrike ended its fourth quarter of fiscal 2026 with $4.66 billion in ARR, reflecting 20% year-over-year growth. The robust increase was fueled by the growing adoption of CrowdStrike’s Falcon Flex subscription model.
Though comparatively a small competitor, SentinelOne posted fourth-quarter fiscal 2026 year-over-year growth of 22% in its ARR. The growth was fueled by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.
PANW’s Price Performance, Valuation & Estimates
Shares of Palo Alto Networks have jumped 33.2% in the year-to-date period compared with the Zacks Security industry’s return of 26.9%.
PANW’s YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 15.49X compared with the industry’s average of 14.24X. The Zacks Value Score of F also suggests that PANW stock is overvalued.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 and 2027 earnings implies year-over-year growth of 10.8% and 7.5%, respectively. The estimate for fiscal 2026 has been unchanged over the past 30 days, while the same for fiscal 2027 has been revised downward by a penny over the past 30 days.
Image Source: Zacks Investment Research
Palo Alto Networks currently carries a Zacks Rank #4 (Sell).
View the Zacks #1 Rank List
Image: Bigstock
Is AI Security Becoming PANW's Biggest Long-Term Growth Opportunity?
Key Takeaways
Palo Alto Networks (PANW - Free Report) is seeing strong demand for AI security products as enterprises increase the use of AI models, AI applications and autonomous AI agents. Nowadays, enterprises are moving beyond AI experimentation and beginning to deploy AI into real business workflows. This trend is creating new security risks as AI agents, machine-to-machine activity and AI-powered applications increase the attack surface. Palo Alto Networks believes that this trend that could support long-term growth across multiple parts of its business.
Palo Alto Networks’ Prisma AIRS platform is gaining traction as companies look to secure AI deployments. Prisma AIRS helps customers protect AI models and AI applications across their lifecycle. During the second quarter, Prisma AIRS customer count more than tripled on a sequential basis to more than 100 customers. Further bookings for Prisma AIRS doubled on a sequential basis and the platform already has a nine-figure pipeline.
AI demand is also helping other Palo Alto Networks businesses. Software firewall ARR grew nearly 25% year over year in the second quarter, as customers secured AI-driven cloud environments. Further, XSIAM, Palo Alto Networks' AI-powered security operations center platform, crossed $500 million in ARR during the second quarter. Palo Alto Networks is also expanding its AI security capabilities through acquisitions like Koi, which focuses on securing AI-related activity at endpoints. The company believes traditional security tools lack visibility into AI-generated code, browser extensions and AI agents running on enterprise devices.
The above-mentioned factors show that as enterprises continue expanding AI deployments, PANW’s prospects are set to benefit as AI security continues to become a larger long-term growth opportunity for the company. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 22.5% and 19.7%, respectively.
How Competitors Fare Against PANW
Competitors like CrowdStrike (CRWD - Free Report) and SentinelOne (S - Free Report) are also gaining ground through platform expansion and AI innovation.
CrowdStrike ended its fourth quarter of fiscal 2026 with $4.66 billion in ARR, reflecting 20% year-over-year growth. The robust increase was fueled by the growing adoption of CrowdStrike’s Falcon Flex subscription model.
Though comparatively a small competitor, SentinelOne posted fourth-quarter fiscal 2026 year-over-year growth of 22% in its ARR. The growth was fueled by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.
PANW’s Price Performance, Valuation & Estimates
Shares of Palo Alto Networks have jumped 33.2% in the year-to-date period compared with the Zacks Security industry’s return of 26.9%.
PANW’s YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 15.49X compared with the industry’s average of 14.24X. The Zacks Value Score of F also suggests that PANW stock is overvalued.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 and 2027 earnings implies year-over-year growth of 10.8% and 7.5%, respectively. The estimate for fiscal 2026 has been unchanged over the past 30 days, while the same for fiscal 2027 has been revised downward by a penny over the past 30 days.
Image Source: Zacks Investment Research
Palo Alto Networks currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.