Palo Alto's forecasts signal AI boost for cybersecurity tools, shares rise
Palo Alto Networks
forecast fiscal 2026 revenue and profit above analysts' estimates on Monday, betting on growing demand for its artificial intelligence-powered cybersecurity solutions, sending its shares up 5% in extended trading.
The company has been benefiting from an AI-driven upgrade cycle as enterprises accelerate their cloud adoption and modernize security operations amid rising
data breach incidents
.
A wave of high-profile cyberattacks has hit global companies including Microsoft, UnitedHealth Group, Walt Disney and Oracle, prompting the need for robust security solutions.
Palo Alto's new launches such as cloud security platform 'Cortex Cloud' and security platform to protect
AI
apps 'Prisma AIRS', together with its planned $25 billion
CyberArk acquisition
, deepen its cybersecurity offerings.
"The company benefits from both net new AI spending as well as a reallocation from services to products (via automation)," said Morningstar analyst Malik Ahmed Khan.
"We think the CyberArk Software acquisition gets them access to more customers to cross-sell identity over to existing Palo Alto customers and the other way around as well."
Palo Alto also announced on Monday that founder and Chief Technology Officer Nir Zuk has retired after being with the company for over 20 years. Long-time product leader Lee Klarich has been named as its CTO and board member.
Klarich will also chair the board's security committee in a bid to bolster the company's AI-driven platform strategy.
The company projected annual revenue between $10.48 billion and $10.53 billion, above analysts' average estimate of $10.43 billion, according to data compiled by LSEG.
It expects adjusted profit per share of $3.75 to $3.85, above estimates of $3.67 for the fiscal year.
The company's first-quarter revenue forecast of $2.45 billion to $2.47 billion came in above expectations of $2.43 billion. Its adjusted quarterly earnings per share of 88 cents to 90 cents was also above estimates of 85 cents.
Palo Alto's fourth-quarter revenue grew 16% to $2.54 billion from a year ago. It reported adjusted EPS of 95 cents for the quarter ended July 31, beating estimates of 88 cents.
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