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.
PANW Stock Rises 21% in a Month: Should You Hold or Book Profits?
Read MoreHide Full Article
Key Takeaways
PANW's XSIAM ARR topped $700M, up 70% y/y, with more than 1,000 customers.
Prisma AIRS surpassed $100M in ARR within four quarters, attracting more than 800 customers.
However, a lower gross margin and a 22.37X forward P/S multiple weigh on PANW's outlook.
Palo Alto Networks (PANW - Free Report) shares have jumped 20.9% in a month, outperforming the Zacks Security industry’s 20.4% growth. The stock has outperformed the returns of other industry peers as well, including Fortinet, Inc. (FTNT - Free Report) , Zscaler (ZS - Free Report) and Check Point Software (CHKP - Free Report) . Shares of Fortinet and Zscaler have returned 15.7% and 15.4%, respectively, while Check Point Software shares have plunged 4.1%.
Palo Alto Networks has been riding on strong enterprise demand for Artificial Intelligence (AI)-native cybersecurity solutions. But with the stock outperforming the industry and peers, the question arises: does it still have room to run, or is it time for investors to consider taking profits? Let us find out.
1-Month Price Return Performance
Image Source: Zacks Investment Research
Strong Momentum in XSIAM Boosts PANW’s Prospects
Palo Alto Networks’ XSIAM business continued to grow rapidly in fiscal 2026. XSIAM ended the fourth quarter of fiscal 2026 with more than $700 million in annual recurring revenues (ARR), which increased 70% year over year and surpassed 1,000 customers. XSIAM was also a key growth driver for PANW’s Cortex business, which generated $1.92 billion in fiscal 2026 revenues, up 25% year over year.
XSIAM is benefiting from PANW’s platform approach. Customer telemetry is already available within XSIAM, allowing the company to add capabilities without requiring customers to go through separate product integrations. The majority of XSIAM customers are using multiple modules, including exposure management and cloud security, which gives PANW more opportunities to expand within existing accounts.
The company is also positioning XSIAM to help customers respond to faster and more complex cyber threats. PANW said that AI-driven attacks can identify vulnerabilities much faster, increasing the need for real-time detection and response. XSIAM supports this strategy by bringing security data together on a unified platform. For instance, a premier IT service provider included XSIAM in a $72-million transaction as part of a broader platformization deal. The customer made eight-figure investments across Network Security, Cortex and Idira.
PANW also sees AI deployment as a long-term demand driver for security operations. The growing use of autonomous agents is expected to create more network traffic, data and machine identities that enterprises will need to monitor and protect. Overall, XSIAM has several factors supporting continued growth, including its expanding customer base, multi-module adoption and rising demand for real-time security. The Zacks Consensus Estimate for fiscal 2027 and 2028 indicates revenue growth of 23.4% and 15.1%, respectively.
Image Source: Zacks Investment Research
Strong Demand in Prisma AIRS Bodes Well for PANW’s Prospects
Palo Alto Networks is seeing growing demand for its AI security products as enterprises move more AI workloads into production. Prisma AIRS, the company's AI security platform, surpassed $100 million in ARR in the fourth quarter of fiscal 2026. It reached this milestone within four quarters of general availability, making it the fastest-scaling product in Palo Alto Networks' history. The product also had more than 800 customers, with most of the company's largest transactions in the fourth quarter, including multiple Prisma AIRS modules.
Prisma AIRS is designed to secure different stages of enterprise AI use. Its capabilities cover machine identities and credentials, monitoring of AI agents, and real-time security controls through an AI gateway. This is becoming more important as companies expand their use of autonomous AI agents and deploy open-weight and open-source models. Palo Alto Networks expects these changes to increase the amount of infrastructure, data and traffic that needs to be secured.
The early customer demand also suggests that Prisma AIRS can support PANW's broader platform strategy. In the fourth quarter, PANW closed a $53-million platformization deal with a leading global payments platform. The customer committed a high-seven-figure amount to Prisma AIRS as it expanded its enterprise AI initiatives.
However, Prisma AIRS is still a relatively small part of PANW's overall business. For fiscal 2027, the company expects Network & AI Security revenues to grow at a low-double-digit rate, so the product will need to scale rapidly to become a major contributor. Still, its fast ARR growth, expanding customer base and rising need for AI security give Prisma AIRS a solid opportunity to become an important growth driver for Palo Alto Networks as enterprise AI adoption increases.
Key Technical Indicator Signals Bullish Trend for PANW
Palo Alto Networks shares are trading above their 50-day and 200-day moving averages, a bullish technical signal that indicates the potential for continued upward momentum in the near term.
PANW 50 & 200-Day Simple Moving Averages
Image Source: Zacks Investment Research
Rising Costs Weigh on PANW’s Prospects
PANW’s non-GAAP gross margin fell 100 basis points year over year to 74.8% in the fourth quarter of fiscal 2026, while the non-GAAP gross margin for fiscal 2026 declined 60 basis points to 75.8%. The decline was mainly due to the growing mix of SaaS offerings, which are still scaling toward mature margin levels. Management expects cloud hosting costs to grow faster than revenues in fiscal 2027, which could weigh on gross-margin expansion.
Palo Alto Networks expects higher commodity costs, particularly for memory and storage, to persist in its hardware business. While strong demand for its Gen 5 firewall appliances remains positive, higher component costs could weigh on hardware profitability.
Palo Alto Networks is currently trading at a high price-to-sales (P/S) multiple, above the Zacks Security industry. The company’s forward 12-month P/S ratio sits at 22.37X, higher than the Zacks Security industry’s forward 12-month P/S ratio of 19.86X. The Zacks Value Score of F also suggests that the PANW stock is overvalued.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The stock trades at a premium valuation to other industry peers, including Fortinet, Zscaler and Check Point Software. At present, Fortinet, Zscaler and Check Point Software have P/S multiples of 14.84X, 8.07X and 4.48X, respectively.
Conclusion: Hold PANW Stock Right 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. Growth in areas such as XSIAM and Prisma AIRS remains strong, supported by large enterprise deals and increasing customer adoption, which provides a favorable long-term growth opportunity for the company.
However, PANW’s rising costs and premium valuation warrant a cautious approach to the stock.
View the Zacks #1 Rank List
Image: Bigstock
PANW Stock Rises 21% in a Month: Should You Hold or Book Profits?
Key Takeaways
Palo Alto Networks (PANW - Free Report) shares have jumped 20.9% in a month, outperforming the Zacks Security industry’s 20.4% growth. The stock has outperformed the returns of other industry peers as well, including Fortinet, Inc. (FTNT - Free Report) , Zscaler (ZS - Free Report) and Check Point Software (CHKP - Free Report) . Shares of Fortinet and Zscaler have returned 15.7% and 15.4%, respectively, while Check Point Software shares have plunged 4.1%.
Palo Alto Networks has been riding on strong enterprise demand for Artificial Intelligence (AI)-native cybersecurity solutions. But with the stock outperforming the industry and peers, the question arises: does it still have room to run, or is it time for investors to consider taking profits? Let us find out.
1-Month Price Return Performance
Image Source: Zacks Investment Research
Strong Momentum in XSIAM Boosts PANW’s Prospects
Palo Alto Networks’ XSIAM business continued to grow rapidly in fiscal 2026. XSIAM ended the fourth quarter of fiscal 2026 with more than $700 million in annual recurring revenues (ARR), which increased 70% year over year and surpassed 1,000 customers. XSIAM was also a key growth driver for PANW’s Cortex business, which generated $1.92 billion in fiscal 2026 revenues, up 25% year over year.
XSIAM is benefiting from PANW’s platform approach. Customer telemetry is already available within XSIAM, allowing the company to add capabilities without requiring customers to go through separate product integrations. The majority of XSIAM customers are using multiple modules, including exposure management and cloud security, which gives PANW more opportunities to expand within existing accounts.
The company is also positioning XSIAM to help customers respond to faster and more complex cyber threats. PANW said that AI-driven attacks can identify vulnerabilities much faster, increasing the need for real-time detection and response. XSIAM supports this strategy by bringing security data together on a unified platform. For instance, a premier IT service provider included XSIAM in a $72-million transaction as part of a broader platformization deal. The customer made eight-figure investments across Network Security, Cortex and Idira.
PANW also sees AI deployment as a long-term demand driver for security operations. The growing use of autonomous agents is expected to create more network traffic, data and machine identities that enterprises will need to monitor and protect. Overall, XSIAM has several factors supporting continued growth, including its expanding customer base, multi-module adoption and rising demand for real-time security. The Zacks Consensus Estimate for fiscal 2027 and 2028 indicates revenue growth of 23.4% and 15.1%, respectively.
Image Source: Zacks Investment Research
Strong Demand in Prisma AIRS Bodes Well for PANW’s Prospects
Palo Alto Networks is seeing growing demand for its AI security products as enterprises move more AI workloads into production. Prisma AIRS, the company's AI security platform, surpassed $100 million in ARR in the fourth quarter of fiscal 2026. It reached this milestone within four quarters of general availability, making it the fastest-scaling product in Palo Alto Networks' history. The product also had more than 800 customers, with most of the company's largest transactions in the fourth quarter, including multiple Prisma AIRS modules.
Prisma AIRS is designed to secure different stages of enterprise AI use. Its capabilities cover machine identities and credentials, monitoring of AI agents, and real-time security controls through an AI gateway. This is becoming more important as companies expand their use of autonomous AI agents and deploy open-weight and open-source models. Palo Alto Networks expects these changes to increase the amount of infrastructure, data and traffic that needs to be secured.
The early customer demand also suggests that Prisma AIRS can support PANW's broader platform strategy. In the fourth quarter, PANW closed a $53-million platformization deal with a leading global payments platform. The customer committed a high-seven-figure amount to Prisma AIRS as it expanded its enterprise AI initiatives.
However, Prisma AIRS is still a relatively small part of PANW's overall business. For fiscal 2027, the company expects Network & AI Security revenues to grow at a low-double-digit rate, so the product will need to scale rapidly to become a major contributor. Still, its fast ARR growth, expanding customer base and rising need for AI security give Prisma AIRS a solid opportunity to become an important growth driver for Palo Alto Networks as enterprise AI adoption increases.
Key Technical Indicator Signals Bullish Trend for PANW
Palo Alto Networks shares are trading above their 50-day and 200-day moving averages, a bullish technical signal that indicates the potential for continued upward momentum in the near term.
PANW 50 & 200-Day Simple Moving Averages
Image Source: Zacks Investment Research
Rising Costs Weigh on PANW’s Prospects
PANW’s non-GAAP gross margin fell 100 basis points year over year to 74.8% in the fourth quarter of fiscal 2026, while the non-GAAP gross margin for fiscal 2026 declined 60 basis points to 75.8%. The decline was mainly due to the growing mix of SaaS offerings, which are still scaling toward mature margin levels. Management expects cloud hosting costs to grow faster than revenues in fiscal 2027, which could weigh on gross-margin expansion.
Palo Alto Networks expects higher commodity costs, particularly for memory and storage, to persist in its hardware business. While strong demand for its Gen 5 firewall appliances remains positive, higher component costs could weigh on hardware profitability.
PANW’s Premium Valuation Warrants Cautious Approach
Palo Alto Networks is currently trading at a high price-to-sales (P/S) multiple, above the Zacks Security industry. The company’s forward 12-month P/S ratio sits at 22.37X, higher than the Zacks Security industry’s forward 12-month P/S ratio of 19.86X. The Zacks Value Score of F also suggests that the PANW stock is overvalued.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The stock trades at a premium valuation to other industry peers, including Fortinet, Zscaler and Check Point Software. At present, Fortinet, Zscaler and Check Point Software have P/S multiples of 14.84X, 8.07X and 4.48X, respectively.
Conclusion: Hold PANW Stock Right 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. Growth in areas such as XSIAM and Prisma AIRS remains strong, supported by large enterprise deals and increasing customer adoption, which provides a favorable long-term growth opportunity for the company.
However, PANW’s rising costs and premium valuation warrant a cautious approach to the stock.
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.