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PANW vs. FTNT: Which Cybersecurity Stock Has an Edge Right Now?
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Key Takeaways
PANW's SASE business grew strongly in Q3 FY26, but rising acquisition costs pressured margins.
FTNT's Unified SASE billings rose 31% Y/Y in Q1 2026 and now represent about 25% of total billings.
FTNT trades at a lower sales multiple than PANW while benefiting from FortiSASE demand.
Palo Alto Networks (PANW - Free Report) and Fortinet (FTNT - Free Report) are both at the forefront of the cybersecurity space, playing key roles in guarding organizations from extensive cyberattacks. While Palo Alto Networks focuses broadly on next-generation firewalls, cloud security and AI-driven threat detection, Fortinet combines a variety of hardware and cloud-based security solutions.
Both PANW and FTNT are riding the key industry trends, driven by the mounting incidents of credential theft, remote desktop protocol breaches and social engineering-based strikes by malicious actors. However, from an investment point of view, one stock offers a more favorable outlook than the other right now. Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which stock offers a more compelling investment case.
The Case for PANW Stock
Palo Alto Networks remains a cybersecurity leader, offering solutions for network security, cloud security and endpoint solutions for customers who need full enterprise security support. Its next-generation firewalls and advanced threat detection technologies are widely recognized and adopted globally.
Palo Alto Networks’ wide range of innovative products, strong customer base and growing opportunities in areas like Zero Trust, Secure Access Service Edge (SASE) and private 5G security continue to support its long-term growth potential. For example, in the third quarter of fiscal 2026, SASE was Palo Alto Networks’ fastest-growing segment, with SASE Annual recurring revenues (ARR) increasing 40% year over year. PANW's SASE business is benefiting from strong customer demand for cloud-delivered networking and security solutions as enterprises continue to support hybrid work environments and secure access to cloud applications.
However, as a result of back-to-back acquisitions, PANW is incurring high integration-related costs, including onboarding employees, aligning go-to-market teams and integrating systems and operations. Acquisition-related costs in the third quarter of fiscal 2026 amounted to $113 million, a whopping increase from $5 million incurred in the prior quarter. These costs are expected to hurt the company's profitability before the benefits of synergies from acquisitions are fully realized.
Further, PANW’s non-GAAP operating expenses rose to $1.46 billion in the third quarter of fiscal 2026, up from $1.19 billion incurred in the prior quarter. As a percentage of revenues, operating expenses expanded 290 basis points sequentially. As a result, non-GAAP operating income margin contracted 320 basis points on a sequential basis. PANW is incurring rising costs, which could lead to slower operating leverage and warrant some caution about the company’s near-term prospects.
The Case for FTNT Stock
Fortinet’s cloud security strategy is based on enabling organizations to move from SD-WAN to its Unified SASE platform. The Unified SASE platform combines networking and security into a cloud-based framework, unlike SD-WAN, which relies on on-premise hardware.
Fortinet's Unified SASE business is becoming an important growth driver. In the first quarter of 2026, Unified SASE billings increased 31% year over year. FTNT's Unified SASE now makes up about 25% of the company's total billings, showing that it has become a meaningful part of the business.
The company is seeing strong adoption of FortiSASE among large customers. At the end of the first quarter, 18% of Fortinet's large enterprise customers were using FortiSASE, up more than 45% year over year. Management said many customers who already use FortiGate firewalls are adding SD-WAN and SASE products. This gives Fortinet an opportunity to sell more products and services to its existing customer base.
Fortinet is also benefiting from demand for Sovereign SASE. FTNT's Sovereign SASE allows customers to run SASE in their own data centers instead of using a public cloud service. This is important for customers who need to meet data privacy, regulatory and sovereignty requirements. Management believes this offering helps differentiate Fortinet from many competitors and is seeing strong demand, especially in Europe.
To support further growth, Fortinet recently launched a new SD-WAN and SASE bundle. Management expects the bundle to make it easier for customers to adopt more networking and security services. With strong billings growth, rising customer adoption and opportunities to sell more services to existing customers, Unified SASE is becoming a larger part of Fortinet's growth story.
How do Earnings Estimates Compare for PANW & FTNT?
Fortinet has a steady earnings growth outlook compared with Palo Alto Networks.
The Zacks Consensus Estimate for PANW’s fiscal 2026 and 2027 EPS is pegged at $3.77 and $4.08, respectively. The estimates for fiscal 2026 and 2027 have been revised up by 6 cents and 8 cents, respectively, over the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Fortinet’s 2026 and 2027 EPS is pinned at $3.13 and $3.39, respectively. The estimates for 2026 and 2027 have both been revised upward by a penny over the past 30 days.
Image Source: Zacks Investment Research
PANW vs. FTNT: Price Performance and Valuation
Year to date, shares of PANW and FTNT have surged 55.5% and 83.1%, respectively.
PANW Vs. FTNT: YTD Price Return Performance
Image Source: Zacks Investment Research
Currently, Fortinet is trading at a forward sales multiple of 13.02X, significantly lower than Palo Alto Networks’ forward sales multiple of 17.33X. FTNT’s reasonable valuation makes it more attractive for investors looking for value and stability.
PANW vs. FTNT: Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Conclusion: FTNT Has an Edge Over PANW
Both Palo Alto Networks and Fortinet are key players in the cybersecurity space, but their near-term outlooks are quite different. Palo Alto Networks faces near-term risks from rising integration costs due to large acquisitions, which are hurting the company’s margins.
In contrast, Fortinet shows steadier execution, where the company is witnessing strong adoption of FortiSASE, Unified SASE and Sovereign SASE. Further, FTNT’s reasonable valuation offers some downside protection as well, giving FTNT a clear edge over PANW for investors seeking exposure to cybersecurity growth at a fair price.
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PANW vs. FTNT: Which Cybersecurity Stock Has an Edge Right Now?
Key Takeaways
Palo Alto Networks (PANW - Free Report) and Fortinet (FTNT - Free Report) are both at the forefront of the cybersecurity space, playing key roles in guarding organizations from extensive cyberattacks. While Palo Alto Networks focuses broadly on next-generation firewalls, cloud security and AI-driven threat detection, Fortinet combines a variety of hardware and cloud-based security solutions.
Both PANW and FTNT are riding the key industry trends, driven by the mounting incidents of credential theft, remote desktop protocol breaches and social engineering-based strikes by malicious actors. However, from an investment point of view, one stock offers a more favorable outlook than the other right now. Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which stock offers a more compelling investment case.
The Case for PANW Stock
Palo Alto Networks remains a cybersecurity leader, offering solutions for network security, cloud security and endpoint solutions for customers who need full enterprise security support. Its next-generation firewalls and advanced threat detection technologies are widely recognized and adopted globally.
Palo Alto Networks’ wide range of innovative products, strong customer base and growing opportunities in areas like Zero Trust, Secure Access Service Edge (SASE) and private 5G security continue to support its long-term growth potential. For example, in the third quarter of fiscal 2026, SASE was Palo Alto Networks’ fastest-growing segment, with SASE Annual recurring revenues (ARR) increasing 40% year over year. PANW's SASE business is benefiting from strong customer demand for cloud-delivered networking and security solutions as enterprises continue to support hybrid work environments and secure access to cloud applications.
However, as a result of back-to-back acquisitions, PANW is incurring high integration-related costs, including onboarding employees, aligning go-to-market teams and integrating systems and operations. Acquisition-related costs in the third quarter of fiscal 2026 amounted to $113 million, a whopping increase from $5 million incurred in the prior quarter. These costs are expected to hurt the company's profitability before the benefits of synergies from acquisitions are fully realized.
Further, PANW’s non-GAAP operating expenses rose to $1.46 billion in the third quarter of fiscal 2026, up from $1.19 billion incurred in the prior quarter. As a percentage of revenues, operating expenses expanded 290 basis points sequentially. As a result, non-GAAP operating income margin contracted 320 basis points on a sequential basis. PANW is incurring rising costs, which could lead to slower operating leverage and warrant some caution about the company’s near-term prospects.
The Case for FTNT Stock
Fortinet’s cloud security strategy is based on enabling organizations to move from SD-WAN to its Unified SASE platform. The Unified SASE platform combines networking and security into a cloud-based framework, unlike SD-WAN, which relies on on-premise hardware.
Fortinet's Unified SASE business is becoming an important growth driver. In the first quarter of 2026, Unified SASE billings increased 31% year over year. FTNT's Unified SASE now makes up about 25% of the company's total billings, showing that it has become a meaningful part of the business.
The company is seeing strong adoption of FortiSASE among large customers. At the end of the first quarter, 18% of Fortinet's large enterprise customers were using FortiSASE, up more than 45% year over year. Management said many customers who already use FortiGate firewalls are adding SD-WAN and SASE products. This gives Fortinet an opportunity to sell more products and services to its existing customer base.
Fortinet is also benefiting from demand for Sovereign SASE. FTNT's Sovereign SASE allows customers to run SASE in their own data centers instead of using a public cloud service. This is important for customers who need to meet data privacy, regulatory and sovereignty requirements. Management believes this offering helps differentiate Fortinet from many competitors and is seeing strong demand, especially in Europe.
To support further growth, Fortinet recently launched a new SD-WAN and SASE bundle. Management expects the bundle to make it easier for customers to adopt more networking and security services. With strong billings growth, rising customer adoption and opportunities to sell more services to existing customers, Unified SASE is becoming a larger part of Fortinet's growth story.
How do Earnings Estimates Compare for PANW & FTNT?
Fortinet has a steady earnings growth outlook compared with Palo Alto Networks.
The Zacks Consensus Estimate for PANW’s fiscal 2026 and 2027 EPS is pegged at $3.77 and $4.08, respectively. The estimates for fiscal 2026 and 2027 have been revised up by 6 cents and 8 cents, respectively, over the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Fortinet’s 2026 and 2027 EPS is pinned at $3.13 and $3.39, respectively. The estimates for 2026 and 2027 have both been revised upward by a penny over the past 30 days.
Image Source: Zacks Investment Research
PANW vs. FTNT: Price Performance and Valuation
Year to date, shares of PANW and FTNT have surged 55.5% and 83.1%, respectively.
PANW Vs. FTNT: YTD Price Return Performance
Image Source: Zacks Investment Research
Currently, Fortinet is trading at a forward sales multiple of 13.02X, significantly lower than Palo Alto Networks’ forward sales multiple of 17.33X. FTNT’s reasonable valuation makes it more attractive for investors looking for value and stability.
PANW vs. FTNT: Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Conclusion: FTNT Has an Edge Over PANW
Both Palo Alto Networks and Fortinet are key players in the cybersecurity space, but their near-term outlooks are quite different. Palo Alto Networks faces near-term risks from rising integration costs due to large acquisitions, which are hurting the company’s margins.
In contrast, Fortinet shows steadier execution, where the company is witnessing strong adoption of FortiSASE, Unified SASE and Sovereign SASE. Further, FTNT’s reasonable valuation offers some downside protection as well, giving FTNT a clear edge over PANW for investors seeking exposure to cybersecurity growth at a fair price.
Fortinet and Palo Alto Networks carry a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.