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Can Palo Alto Networks' SASE Push Help It Challenge FTNT and ZS?
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Key Takeaways
PANW displaced legacy vendors in nearly 100 customer accounts, representing over $400M in contract value.
PANW integrates SASE, firewalls and SD-WAN to help enterprises consolidate security tools with one vendor.
PANW's SASE platform saw agentic traffic increase 9x over nine months, supporting demand for AI security.
Palo Alto Networks (PANW - Free Report) is gaining traction in the Secure Access Service Edge (SASE) market as businesses look to consolidate their security tools. The company’s SASE bookings grew 40% in fiscal 2026, supported by growth across Access, SD-WAN and secure browser. PANW displaced legacy vendors in nearly 100 customer accounts, representing more than $400 million in total contract value. The displacement volume was nearly double that of the prior year. This strong momentum should help the company strengthen its position against key rivals in the SASE space such as Fortinet (FTNT - Free Report) and Zscaler (ZS - Free Report) .
Palo Alto Networks’ platform strategy is helping it win these customers. The company integrates SASE with its firewall, SD-WAN and other security products, allowing existing customers to add SASE without bringing in another vendor. Management said this makes platform standardization a simpler choice for customers. Per management, PANW is currently the No. 2 player in SASE and aims to become the market leader over the next five to seven years. Continued customer consolidation could support this goal as enterprises look to reduce the number of security vendors they use.
PANW has also benefited from its earlier acquisition of CloudGenix and its integration of SD-WAN into the company’s SASE platform. Management said integrating SASE with its firewall and SD-WAN products gives customers an easier path to platform standardization, helping PANW win business from existing SASE vendors. In the fourth quarter of fiscal 2026, a global telecom leader signed a $126 million agreement to expand its next-generation firewall footprint while replacing legacy proxy providers with Prisma Access for SASE.
AI could provide another source of SASE demand. PANW said agentic traffic on its SASE platform has increased 9x over the past nine months. As companies deploy more AI agents, the amount of network traffic and data that needs to be monitored and secured is likely to increase. Overall, strong SASE bookings, rising competitive displacements and PANW’s broader security platform give the company a solid base to gain more share.
How Competitors Fare Against PANW
Fortinet is using its integrated platform as a key SASE differentiator. Its SASE Firewall combines firewall, SASE and hybrid mesh capabilities on FortiOS, while its on-premises and cloud deployment options are designed to address data privacy, performance and sovereignty requirements. Fortinet’s SASE Firewall business grew 34% in the second quarter of 2026 to more than $2 billion, while Unified SASE billings rose 35%. A key customer win in the second quarter included a global pharmaceutical company, which signed a seven-figure FortiSASE deal covering more than 45,000 users and replaced an incumbent SSE-only provider.
Zscaler is also gaining traction with its cloud-based Zero Trust approach. In the fourth quarter of fiscal 2026, the company’s ARR increased 25% year over year. Zscaler said its Zero Trust SASE business continued to see expansion, including a seven-figure upsell with a Global 2000 financial services customer that increased ARR by nearly 50%. It also won a seven-figure new-logo deal with a Fortune 500 life sciences company that deployed Zero Trust SASE and security for AI across 75,000 users while displacing a legacy firewall-based SASE platform.
PANW’s Price Performance, Valuation & Estimates
Shares of Palo Alto Networks have jumped 104.1% in the year-to-date period compared with the Zacks Security industry’s appreciation of 92.6%.
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 21.31X compared with the industry’s average of 19.13X. The Zacks Value Score of F 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 2027 and 2028 earnings implies year-over-year growth of 8.6% and 18%, respectively. The estimates for fiscal 2027 have been revised up by a penny over the past seven days. The same for fiscal 2028 has been revised down by a penny over the past seven days.
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Can Palo Alto Networks' SASE Push Help It Challenge FTNT and ZS?
Key Takeaways
Palo Alto Networks (PANW - Free Report) is gaining traction in the Secure Access Service Edge (SASE) market as businesses look to consolidate their security tools. The company’s SASE bookings grew 40% in fiscal 2026, supported by growth across Access, SD-WAN and secure browser. PANW displaced legacy vendors in nearly 100 customer accounts, representing more than $400 million in total contract value. The displacement volume was nearly double that of the prior year. This strong momentum should help the company strengthen its position against key rivals in the SASE space such as Fortinet (FTNT - Free Report) and Zscaler (ZS - Free Report) .
Palo Alto Networks’ platform strategy is helping it win these customers. The company integrates SASE with its firewall, SD-WAN and other security products, allowing existing customers to add SASE without bringing in another vendor. Management said this makes platform standardization a simpler choice for customers. Per management, PANW is currently the No. 2 player in SASE and aims to become the market leader over the next five to seven years. Continued customer consolidation could support this goal as enterprises look to reduce the number of security vendors they use.
PANW has also benefited from its earlier acquisition of CloudGenix and its integration of SD-WAN into the company’s SASE platform. Management said integrating SASE with its firewall and SD-WAN products gives customers an easier path to platform standardization, helping PANW win business from existing SASE vendors. In the fourth quarter of fiscal 2026, a global telecom leader signed a $126 million agreement to expand its next-generation firewall footprint while replacing legacy proxy providers with Prisma Access for SASE.
AI could provide another source of SASE demand. PANW said agentic traffic on its SASE platform has increased 9x over the past nine months. As companies deploy more AI agents, the amount of network traffic and data that needs to be monitored and secured is likely to increase. Overall, strong SASE bookings, rising competitive displacements and PANW’s broader security platform give the company a solid base to gain more share.
How Competitors Fare Against PANW
Fortinet is using its integrated platform as a key SASE differentiator. Its SASE Firewall combines firewall, SASE and hybrid mesh capabilities on FortiOS, while its on-premises and cloud deployment options are designed to address data privacy, performance and sovereignty requirements. Fortinet’s SASE Firewall business grew 34% in the second quarter of 2026 to more than $2 billion, while Unified SASE billings rose 35%. A key customer win in the second quarter included a global pharmaceutical company, which signed a seven-figure FortiSASE deal covering more than 45,000 users and replaced an incumbent SSE-only provider.
Zscaler is also gaining traction with its cloud-based Zero Trust approach. In the fourth quarter of fiscal 2026, the company’s ARR increased 25% year over year. Zscaler said its Zero Trust SASE business continued to see expansion, including a seven-figure upsell with a Global 2000 financial services customer that increased ARR by nearly 50%. It also won a seven-figure new-logo deal with a Fortune 500 life sciences company that deployed Zero Trust SASE and security for AI across 75,000 users while displacing a legacy firewall-based SASE platform.
PANW’s Price Performance, Valuation & Estimates
Shares of Palo Alto Networks have jumped 104.1% in the year-to-date period compared with the Zacks Security industry’s appreciation of 92.6%.
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 21.31X compared with the industry’s average of 19.13X. The Zacks Value Score of F 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 2027 and 2028 earnings implies year-over-year growth of 8.6% and 18%, respectively. The estimates for fiscal 2027 have been revised up by a penny over the past seven days. The same for fiscal 2028 has been revised down by a penny over the past seven days.
Image Source: Zacks Investment Research
Palo Alto Networks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.