Palo Alto Networks (NASDAQ:PANW) has quickly become one of the most dominant names in cybersecurity. With artificial intelligence reshaping the threat landscape, investors are asking: is Palo Alto Networks stock a buy now? The company recently reported strong fiscal 2025 earnings, crossing the $10 billion revenue run rate and laying out ambitious growth targets. Let’s dive into the fundamentals, growth drivers, valuation, and Wall Street sentiment to determine whether PANW is worth buying today.
Palo Alto Networks Stock: Strong Earnings and Growth
Palo Alto Networks stock recently got a boost from solid fourth-quarter results. The company posted $2.54 billion in revenue, representing a 16% year-over-year increase. Product revenue rose 19%, led by software firewalls and SD-WAN, while services revenue climbed 15%. Importantly, 56% of product revenue now comes from software, a sign of the company’s successful pivot toward next-generation security models.
The firm also reported a record $3.5 billion in free cash flow (FCF), with management guiding for 38–39% of revenue to be converted into FCF in fiscal 2026. This financial strength reinforces Palo Alto Networks’ ability to invest aggressively in research, acquisitions, and shareholder returns.
Key Growth Drivers Supporting Palo Alto Networks Stock
The bullish case for Palo Alto Networks stock centers on three main growth pillars:
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Prisma SASE Platform – This secure access service edge solution is one of the fastest-growing network security products in the market. The company recently signed a $60 million contract covering 200,000 seats, underscoring strong enterprise adoption.
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XSIAM Security Platform – Palo Alto is leveraging AI to enhance security operations, improving detection and response capabilities.
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Software Firewalls – Demand for software-based solutions continues to rise as enterprises move away from hardware-heavy models.
In addition, Palo Alto’s remaining performance obligation (RPO) climbed 24% to $15.8 billion, signaling robust future revenue streams. Management projects next-generation security ARR could reach $15 billion by 2030, reinforcing long-term growth potential.
Strategic Expansion: Palo Alto Enters Identity Security
Another bullish driver for Palo Alto Networks stock is its entry into the identity security market. The company recently announced a partnership with CyberArk (NASDAQ:CYBR), a leader in privileged access management. The acquisition is expected to close in fiscal 2026 and could significantly expand Palo Alto’s total addressable market.
By fiscal 2028, management anticipates the combined entity could generate 40%+ adjusted FCF margins, benefiting from integration synergies and broader customer reach. This move positions Palo Alto not just as a firewall leader, but as a full-spectrum cybersecurity powerhouse.
Is Palo Alto Networks Stock Overvalued?
While Palo Alto Networks stock has impressive fundamentals, valuation is a sticking point. At nearly 48 times forward earnings, PANW trades at a premium compared to peers. This suggests that much of the future growth story may already be priced in.
For risk-tolerant investors, buying at current levels around $175 could pay off if Palo Alto continues delivering double-digit growth. More conservative investors may prefer to wait for a pullback closer to $130, which offers a margin of safety.
Wall Street’s Take on Palo Alto Networks Stock
Analysts remain broadly bullish on Palo Alto Networks stock. Out of 49 analysts, 34 rate it a Strong Buy, two a Moderate Buy, 12 a Hold, and only one a Strong Sell.
The average target price is $215.07, implying a 15% upside. The Street-high estimate of $240 suggests potential upside of nearly 28% over the next year. Clearly, Wall Street sees significant growth opportunities ahead despite the stock’s elevated valuation.
The Bottom Line: Should You Buy Palo Alto Networks Stock Now?
Cybersecurity demand is only expected to rise in the years ahead, and Palo Alto Networks stock offers exposure to one of the sector’s best-positioned companies. Its strong balance sheet, next-generation platforms, and bold expansion into identity security reinforce its long-term potential.
That said, the valuation is steep, which may concern more cautious investors. For those with a higher risk appetite, Palo Alto Networks (NASDAQ:PANW) looks like a strong long-term buy today. Conservative investors may prefer to wait for a better entry point. Either way, Palo Alto remains one of the most compelling cybersecurity plays of this decade.
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