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Palo Alto Networks: Mismatched AI Cybersecurity Excitement

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Update - Sept. 2, 2026

Palo Alto Networks with the solid beat as expected. The stock just has nowhere to go at this valuation, leading to the 9% dip following earnings. The cybersecurity company forecast a FY27 EPS of only $4.175 for only around 9% growth while the stock still trades at 78.5x EPS targets. The numbers just don't support the big rally. 

-FQ4 Non-GAAP EPS of $1.02 beats by $0.04.
-Revenue of $3.41B (+34.3% Y/Y) beats by $60M.

These FY27 guidance numbers appear very low.
-Next-Generation Security ARR of $11.075 billion to $11.175 billion, representing year-over-year growth of 22% to 23%.
-Remaining performance obligations of $25.2 billion to $25.4 billion, representing year-over-year growth of 19% to 20%.

Finviz Chart

 

Original article posted on Aug. 29

  • Palo Alto Networks trades near all-time highs, with the stock valuation far outpacing business fundamentals and organic growth trends.
  • PANW's organic growth slowed to ~14% in the last quarter, while EPS growth is muted due to recent M&A, despite AI sector enthusiasm.
  • Research shows that public mergers don't normally work out to boost shareholder return, and the cybersecurity company appears to be eager to head down that path again.
  • The stock trades at over 22x forward sales and 100x FY26 EPS, with only mid-teen organic growth forecasted.
Palo Alto Networks, Inc. (PANW) heads into quarterly results with the market expecting fantastic results following great results from a peer. The cybersecurity sector remains hot following an expected demand surge due to AI, but the stock has already soared far beyond the benefits to the business. My investment thesis remains ultra-bearish on the stock trading above $370, close to all-time highs.


Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

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