Palo Alto Networks (PANW) AI Stock Analysis

• Market Cap: $139.25B
• Dividend Yield: N/A
• Average Volume (3M): 8.24M
• Price to Earnings (P/E): 130.1
• Beta (1Y): 1.28
• Revenue Growth: 14.87%
• EPS Growth: -57.43%
• Country: US
• Employees: 15,758
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.95
• Shares Outstanding: 668,900,000
• 10 Day Avg. Volume: 5,540,949
• 30 Day Avg. Volume: 8,241,702
• PEG Ratio: -1.76
• Price to Book (P/B): 14.70
• Price to Sales (P/S): 12.47
• P/FCF Ratio: 30.95
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 13.08
• Enterprise Value/Gross Profit: 17.81
• Enterprise Value/Ebitda: 62.13
• 1Y Price Target: $217.09
• Price Target Upside: 6.81% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 36

• Rating: 80 Outperform
• Price Target: $219.00 ▲(7.75% Upside)

Palo Alto Networks' strong financial performance and positive earnings call sentiment are the most significant factors driving the score. The company's strategic focus on next-generation security and AI-led innovation positions it well for future growth. However, high valuation metrics and technical indicators suggesting overbought conditions slightly temper the overall score.

Positive Factors

Revenue Growth

Achieving a $10 billion revenue run rate indicates strong market demand and effective sales strategies, supporting long-term growth.

Strategic Acquisition

The merger with CyberArk strengthens Palo Alto Networks' cybersecurity offerings, potentially increasing market share and competitive advantage.

Operating Margin Expansion

Improved operating margins reflect efficient cost management and increased profitability, enhancing financial stability and investor confidence.

Negative Factors

Inventory Challenges

Inventory issues can strain resources and affect profitability, requiring strategic adjustments to improve supply chain efficiency.

Identity Market Competition

High competition in the identity market may hinder rapid market share gains, requiring innovation and differentiation to succeed.

High Liabilities

High liabilities can limit financial flexibility and increase risk, necessitating careful debt management to maintain balance sheet health.

Palo Alto Networks Business Overview & Revenue Model

Company Description

Palo Alto Networks, Inc. (PANW) is a global cybersecurity leader specializing in providing advanced security solutions for enterprises, service providers, and government entities. The company operates primarily in the cybersecurity sector, delivering a comprehensive suite of products and services that include next-generation firewalls, cloud-based security, endpoint protection, and threat intelligence. With a focus on innovation, Palo Alto Networks aims to protect organizations from cyber threats through its integrated platform that spans across various environments, including on-premises, cloud, and hybrid infrastructures.

How the Company Makes Money

Palo Alto Networks generates revenue primarily through the sale of its cybersecurity products and associated subscription services. The company operates on a recurring revenue model, which includes subscription offerings for its software and services, as well as hardware sales of its next-generation firewalls. Key revenue streams include subscriptions for its cloud security, endpoint protection, and threat intelligence services. Additionally, Palo Alto Networks benefits from professional services, such as consulting and training, which further enhance its revenue. The company has established significant partnerships with technology providers and system integrators that bolster its market presence and expand its reach, thus contributing to its earnings.

Palo Alto Networks Financial Statement Overview

Summary

Palo Alto Networks demonstrates strong financial health with consistent revenue growth and robust cash flow generation. The company maintains a solid balance sheet with low leverage, although profitability has faced some pressure with a decrease in net profit margin.

Income Statement

Palo Alto Networks has demonstrated strong revenue growth, with a 3.9% increase in the latest year, building on previous growth. The gross profit margin is robust at 75.2%, indicating efficient cost management. However, the net profit margin has decreased to 12.3% from 32.1% the previous year, primarily due to a significant drop in net income. The EBIT and EBITDA margins have improved, reflecting better operational efficiency.

Balance Sheet

The company's balance sheet shows a healthy debt-to-equity ratio of 0.043, indicating low leverage and reduced financial risk. The return on equity has decreased to 14.5% from 49.9%, suggesting a decline in profitability relative to shareholder equity. The equity ratio is strong, reflecting a solid capital structure with stockholders' equity making up a significant portion of total assets.

Cash Flow

Cash flow analysis reveals a strong free cash flow growth rate of 23.8%, indicating effective cash generation. The operating cash flow to net income ratio is 0.47, and the free cash flow to net income ratio is 1.0, highlighting efficient cash conversion and a strong ability to generate cash relative to net income.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	9.22B	9.22B	8.03B	6.89B	5.50B	4.26B
Gross Profit	6.77B	6.77B	5.97B	4.98B	3.78B	2.98B
EBITDA	1.94B	1.94B	1.28B	869.00M	95.60M	-46.60M
Net Income	1.13B	1.13B	2.58B	439.70M	-267.00M	-498.90M
Balance Sheet
Total Assets	23.58B	23.58B	19.99B	14.50B	12.25B	10.24B
Cash, Cash Equivalents and Short-Term Investments	2.90B	2.90B	2.58B	2.39B	3.63B	2.90B
Total Debt	338.20M	338.20M	1.34B	2.27B	3.95B	3.54B
Total Liabilities	15.75B	15.75B	14.82B	12.75B	12.04B	9.48B
Stockholders Equity	7.82B	7.82B	5.17B	1.75B	210.00M	763.60M
Cash Flow
Free Cash Flow	3.72B	3.47B	3.10B	2.63B	1.79B	1.39B
Operating Cash Flow	3.72B	3.72B	3.26B	2.78B	1.98B	1.50B
Investing Cash Flow	-2.20B	-2.20B	-1.51B	-2.03B	-933.40M	-1.48B
Financing Cash Flow	-778.90M	-778.90M	-1.34B	-1.73B	-806.60M	-1.10B

Palo Alto Networks Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 203.25
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Positive. The current price of 203.25 is above the 20-day moving average (MA) of 197.01, above the 50-day MA of 189.21, and above the 200-day MA of 187.63, indicating a bullish trend. The MACD of 5.38 indicates Negative momentum. The RSI at 63.27 is Neutral, neither overbought nor oversold. The STOCH value of 79.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PANW.

Palo Alto Networks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PANW	80 Outperform	$139.25B	130.10	17.45%	―	14.87%	-57.43%
CHKP	76 Outperform	21.79B	26.21	0.00%	―	6.27%	7.14%
FTNT	67 Neutral	65.14B	34.03	94.14%	―	14.46%	48.06%
CYBR	67 Neutral	24.75B	-142.66	-3.94%	―	39.45%	-982.51%
ZS	67 Neutral	46.16B	-1,078.64	-2.31%	―	23.31%	31.04%
CRWD	66 Neutral	123.76B	-404.56	-7.91%	―	23.46%	-270.07%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Palo Alto Networks Corporate Events

Palo Alto Networks Announces Leadership Changes and Growth

On August 18, 2025, Palo Alto Networks announced significant changes in its leadership and governance structure. Nir Zuk resigned as Chief Technology Officer and director, while Lee Klarich was appointed to the board and as Chief Product and Technology Officer. The company also reported strong financial results for the fiscal year 2025, with a 16% increase in fourth-quarter revenue and a 15% rise in annual revenue, reaching $9.2 billion. The company continues to demonstrate robust growth and operational efficiency, positioning itself well for future expansion.

Palo Alto Networks Announces Merger with CyberArk

On July 30, 2025, Palo Alto Networks entered into a merger agreement with CyberArk Software, whereby CyberArk will become a wholly owned subsidiary of Palo Alto Networks. The merger, subject to customary closing conditions and regulatory approvals, involves CyberArk shareholders receiving shares of Palo Alto Networks and cash. The merger aims to strengthen Palo Alto Networks’ position in the cybersecurity sector, with both companies’ boards unanimously approving the agreement. Termination fees are outlined for specific circumstances, ensuring commitment to the merger process.

Palo Alto Networks Announces Merger with CyberArk

On July 30, 2025, Palo Alto Networks announced a merger agreement with CyberArk Software Ltd., aiming to enhance its platformization strategy by integrating identity security. The merger is expected to be accretive to revenue growth and gross margin immediately post-close, with significant synergy potential through cross-selling opportunities to Palo Alto’s extensive customer base.