AI is not a threat, it is a dividend! Analysts: Cybersecurity leader Palo Alto Networks (PANW.US) is approaching a new growth inflection point, and the timing of its layout is just right.

Since 2026, the US stock network security sector has been impacted twice by concerns of "AI disruption", causing a decline in the stock price of Palo Alto Networks (PANW.US). Although Palo Alto Networks' stock price has recently recovered, the market may still not have fully priced in its core competitiveness and long-term growth potential in the AI security field. Financial analyst Forward Analytics believes that for Palo Alto Networks, the rapid deployment of AI is not a threat, but a structural growth dividend. As a leading company in the network security field, Palo Alto Networks' current valuation is still significantly underestimated. Therefore, analysts maintain a "buy" rating with a target price of $216, representing a 21% upside from the current stock price. AI opens up the growth ceiling of the network security industry The large-scale deployment of AI in the enterprise sector is reshaping the logic of the network security industry. While the market focuses on the productivity gains brought by AI, it overlooks the key risks: each AI agent deployed by an enterprise expands its attack surface, each automated workflow adds lateral penetration paths, and each piece of AI-generated code could introduce potential vulnerabilities. As the CEO of Palo Alto Networks stated in the 2026 fiscal second quarter earnings call, AI agents render traditional security protection systems obsolete. In the view of Forward Analytics, this is not just marketing jargon, but a core driver supporting Palo Alto Networks' continued growth in the coming years. Network security has transitioned from discretionary spending to essential demand, further opening up the industry's growth ceiling. The global network security market was approximately $227.6 billion in 2025, and is projected to reach $351.9 billion by 2030, with a compound annual growth rate of 9.1%. Meanwhile, Palo Alto Networks' revenue growth has been consistently above 15%, nearly double the industry growth rate. Structural drivers are sustainable. Ransomware, supply chain attacks, zero-day vulnerabilities, and AI-enhanced phishing have become standard enterprise risks. In addition to this, the strengthening of network security disclosure requirements by the US SEC, rising security expenditures becoming a board governance issue, and escalating conflicts like those of GEO Group Inc, coupled with frequent national-level cyber attacks, provide solid support for government security budgets. As a leading platform in security, Palo Alto Networks' AI initiatives are ahead of the industry. The company's AI security product, Prisma AIRS, has seen rapid growth, doubling its customer base to over 100 in the second quarter of the 2026 fiscal year, demonstrating strong market acceptance and approval. Furthermore, Palo Alto Networks has been listed as one of the first members of Anthropic's network security project Glasswing, further solidifying its dual advantages in AI research and AI security protection. Fundamentals remain robust, with ample growth momentum Financial data confirms that Palo Alto Networks' fundamentals remain solid. The company's total revenue was $9.2 billion in 2025, a year-over-year growth of 14.9%, maintaining double-digit growth for five consecutive years. In the second quarter of the 2026 fiscal year, revenue was $2.6 billion, with a similar growth rate of 14.9%. Management has raised the full-year revenue guidance from around $10.5 billion to $11.28-11.31 billion, with the possibility of accelerating revenue growth to 22%-23% in the second half of the year. Moreover, the company's revenue outlook is clear. Remaining performance obligations (RPO), a leading indicator of future revenue, reached a record $16 billion in the second quarter, a year-over-year increase of approximately 23%. Annual recurring revenue (ARR) for the Next-Gen Security business (NGS) reached $6.3 billion in the second quarter, a significant 33% increase year-over-year, and management expects it to reach $7.94-7.96 billion in the 2026 fiscal year, representing a staggering 56% year-over-year growth. With a subscription model, the rapid growth signifies sustainability and predictability rather than a flash in the pan. Additionally, the company's non-GAAP operating profit margin was 30.3% in the second quarter, exceeding 30% for the third consecutive quarter, indicating operational maturity. Management expects the free cash flow profit margin to increase to 40% by 2028, signifying significant operational leverage as revenue scales up. The company's operating cash flow in the past 12 months was nearly $4 billion, with a gross margin maintained above 70%, demonstrating strong operating leverage. The company's management raised the full-year revenue guidance from around $10.5 billion to $11.28-11.31 billion, reflecting strong demand for platform services. However, the earnings per share guidance was revised from $3.80-3.90 to $3.65-3.70, causing investor dissatisfaction and leading to a decline in the company's stock price after the earnings report was released. Nevertheless, according to Forward Analytics, investors have overreacted, as the downward revision of earnings per share reflects the impact of investments in CyberArk and Chronosphere, rather than a deterioration in core demand. Of note, the company expects the ARR for the NGS business to reach $20 billion in 2030, reaffirming the target of a 40% free cash flow profit margin by 2028. Setting robust long-term revenue growth targets while adjusting short-term earnings per share guidance is a sign of investment rather than devaluation. The "AI disruptor" panic brings buying opportunities Since 2026, US stock network security stocks have faced two rounds of sell-offs due to AI-related events. The first occurred in February, when Anthropic launched the Claude Code security tool, causing market concerns; the second occurred recently, with the release of information related to the Claude Mythos model once again impacting the entire sector. In the view of Forward Analytics, the market has clearly mispriced, especially for Palo Alto Networks. The current panic has blurred product boundaries: the market equates basic code scanning tools with Palo Alto Networks' core security solutions such as runtime detection, cloud security, and network firewalls. In fact, as AI deployments become more widespread, enterprises need more protection against cyber threats, rather than less. This wave of AI-induced market panic is actually accelerating the demand for Palo Alto Networks' core security solutions. On the valuation front, analysts have used a Graham intrinsic value model to calculate that the company's fair value is approximately $215.66 per share, representing a roughly 20.8% premium from the current stock price. Finally, analysts state that while Palo Alto Networks still faces potential pressures from intensified competition from tech giants like Microsoft Corporation, as well as tightening enterprise IT budgets, the company's overall fundamentals remain robust, with ample growth momentum and attractive valuation. This round of correction has not changed its long-term value, but instead provided investors with a good opportunity to enter the market.