The demand for cybersecurity is still flexible. Goldman Sachs Group, Inc. supports Palo Alto Networks (PANW.US).

Goldman Sachs Group, Inc. has released a research report, maintaining a "buy" rating on Palo Alto Networks (PANW.US) with a target price of $215. Goldman Sachs Group, Inc. believes that despite industry demand facing uncertainty, cybersecurity is one of the more resilient software categories this year. The company sees Palo Alto as one of the only three companies that can drive security strategy and market share growth (the other two being Microsoft Corporation and CrowdStrike), and believes the company is poised to continue driving cross-sales and achieve good economic benefits in the long term. According to the report, Goldman Sachs Group, Inc. has recently held discussions with Palo Alto executives and industry experts, covering the following points: - In terms of demand environment, Palo Alto acknowledges that the uncertainty in the macroeconomic environment has led to extended sales cycles. However, cybersecurity demand is relatively resilient, with most customers placing greater importance on cybersecurity, especially against the backdrop of heightened political risks, such as those faced by GEO Group Inc. Additionally, Palo Alto points out that it has a platform advantage in budget-sensitive environments. - Regarding industry feedback, distributors have a neutral to negative view. Conversations with industry distributors have shown that the demand for security products from the U.S. federal government has significantly slowed down, but commercial (non-government) demand remains relatively stable, especially in identity and data protection areas, which are related to the adoption of artificial intelligence. - In terms of tariff impact, Palo Alto notes that it is the only scale firewall supplier that conducts 100% of its testing and assembly in the U.S. The company believes that it can maintain profitability compared to competitors with more Asian supply chains, and remains more attractive in terms of pricing. - In regards to cloud and Cortex business, Palo Alto announced on February 13th that it will integrate its cloud business with the Cortex platform, which requires significant rewriting of the cloud technology stack. Goldman Sachs Group, Inc. believes that this strategic decision may also reflect Palo Alto's recognition that its cloud business growth has been disappointing. Additionally, Palo Alto has made progress in transitioning QRadar on Cloud (QRoC) customers to Cortex. Goldman Sachs Group, Inc.'s research indicates that Palo Alto is primarily focusing on expanding its Cortex business with large enterprise clients, and views Alphabet Inc. Class C Chronicle, Splunk, and Microsoft Corporation as its main competitors, with CrowdStrike potentially having an advantage in the mid-market. As of Thursday's closing on the U.S. stock market, Palo Alto fell by 5.7%, closing at $174.44.