PANW Is Down 19% But Its AI Security Bet May Change That

Core Viewpoint - Palo Alto Networks (PANW) is experiencing a significant decline in stock price, down 21% year-to-date and 24% over the past year, but its recent acquisitions in AI security may provide a turnaround opportunity [1] Financial Performance - Revenue for Q2 FY2026 grew 15% year-over-year to $2.59 billion, with adjusted EPS of $1.03 beating expectations [1] - Next-generation security Annual Recurring Revenue (ARR) increased by 33% to $6.33 billion [1] - Full-year profit guidance was cut due to acquisition costs, leading to a drop in share price by 5-7% in after-hours trading [1] Market Sentiment - Reddit sentiment shifted from bearish (35-38) to bullish (62) following strategic announcements, indicating a change in investor perception [1] - Analysts have set a price target of $216.83 for PANW, significantly higher than the current price of $148.70 [1] Strategic Acquisitions - Palo Alto Networks acquired CyberArk for $25 billion and Koi Security for $400 million, enhancing its AI security capabilities [1] - The acquisition of CyberArk adds identity security to its platform, while Koi Security focuses on AI endpoint protection [1] Competitive Landscape - The cybersecurity market is expanding, with network-layer DDoS attacks rising by 168% in 2025, creating opportunities for companies like Palo Alto Networks [1] - Analysts believe that companies that can integrate identity, endpoint, and network security will dominate the enterprise security market in the coming decade [1]