Palo Alto Networks Earnings Put AI and Firewalls in Focus

 TipsWhisper
 
  TipsWhisper
 
Follow  Message
 
 
TipsWhisp is an investment enthusiast sharing actionable tips and insights. Focused on market trends, TipsWhisp delivers concise content to empower smarter decision-making in the stock market.
 

•  13 Nov 2026
 

$PANW Palo Alto Networks heads into earnings next week after losing about 20% over the past month. KeyBanc sees the pullback as an opportunity ahead of faster growth in enterprise cybersecurity budgets. On Friday, the firm upgraded Palo Alto Networks from Market Weight to Overweight and set a $380 price target, about 19% above the share price. Morgan Stanley remains positive with a $410 target, while concerns about slowing firewall demand and competition in AI security continue to weigh on the stock.

$ZS Zscaler fell about 0.6% in the broader technology selloff, while CrowdStrike lost about 2.1%. Palo Alto Networks fell about 0.7% to $320.45 despite the upgrade. The upcoming report will test whether growth in newer products can address the concerns weighing on the stock. Analysts expect about $3.3 billion in revenue and $0.97 in adjusted earnings per share for the fiscal first quarter ended October 31. Investors will also watch guidance for the rest of the year and the mix of demand across products.

KeyBanc analyst Eric Heath expects cybersecurity spending to grow more than 20% in 2027, compared with single-digit growth in early 2026. He says AI-enabled threats are pushing security leaders to increase investment and shift spending from routine maintenance to technology upgrades and AI system security. Organizations need to adapt their defenses as both attackers and businesses use AI. Heath expects that need to support demand for new products even as customers scrutinize their technology budgets.

$CRWD CrowdStrike and Palo Alto Networks stand to benefit from security platform consolidation, according to Heath. More organizations are moving procurement to vendors that offer a range of security products so they can manage fewer separate tools. Vendors with broad offerings can sell more products to existing customers and replace competing products.

Palo Alto Networks has expanded its AI and network security offerings through targeted acquisitions, according to KeyBanc. Heath sees the large proprietary dataset the company has built as an advantage over AI labs entering cybersecurity, while recognizing those labs as a competitive threat. He also points to the ability of Palo Alto Networks to sell an integrated platform. An industry partner told Heath that rivals struggle to match its breadth, sales discipline, and success in winning customers from competitors. That account supports the upgrade and provides qualitative evidence about competition.

$FTNT Fortinet reported disappointing third-quarter results, reinforcing concerns about demand for traditional firewalls. That business remains an important part of Palo Alto Networks, and cooling hardware upgrade cycles and a shift toward cloud security have raised concerns about a slowdown. Growth in cloud subscriptions and AI products could offset weakness in legacy products, making the sales mix a key part of the upcoming report. KeyBanc also flags the risk of slower customer budget growth, while AI labs developing their own security tools add uncertainty to the outlook.

Morgan Stanley analyst Meta Marshall maintains an Overweight rating and a $410 price target, about 28% above the share price. She expects management to raise fiscal 2027 guidance for next-generation security annual recurring revenue, or ARR. The metric measures the annualized pace of recurring subscription revenue and tracks the expansion of advanced cloud and AI security products. Revenue recognized during the quarter is a separate measure. A guidance increase would signal stronger expectations for the newer business, and Marshall is forecasting that increase ahead of the report.

The earnings report needs to show that the legacy business is holding up as expected and that cloud and AI security products can keep expanding. KeyBanc and Morgan Stanley see opportunity in that product mix after the sharp decline. So far, the KeyBanc upgrade has left Palo Alto Networks trading lower alongside the broader technology sector.

View all market intelligence