Software Stocks Selloff Amid AI Tool Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 23 2026
0mins
Should l Buy PANW?
Source: stocktwits
- Market Sentiment Shift: Investors are pulling out of software stocks amid concerns that AI tools may reduce demand for niche enterprise software, with stocks like Palo Alto Networks and Zscaler dropping over 10% last week, indicating a waning confidence in traditional software solutions.
- Earnings Impact: Palo Alto Networks reported a third-quarter profit that missed expectations and lowered its 2026 profit outlook, leading to a stock price decline that reflects the company's vulnerability in the face of AI competition, potentially affecting its future market performance.
- New Tool Launch Impact: The release of Anthropic's Claude Code Security tool, which uncovered over 500 high-severity vulnerabilities during internal testing, has intensified market fears regarding traditional cybersecurity software, prompting investors to reassess the value of these companies.
- Diverging Analyst Views: Despite the bearish market sentiment, Barclays analysts argue that the selloff in cybersecurity stocks “seems incongruent,” asserting that Anthropic's tool does not directly replace the core offerings of major cybersecurity vendors, indicating a level of confidence in the industry.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy PANW?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on PANW
Wall Street analysts forecast PANW stock price to rise
34 Analyst Rating
28 Buy
5 Hold
1 Sell
Strong Buy
Current: 165.100
Low
157.00
Averages
232.49
High
265.00
Current: 165.100
Low
157.00
Averages
232.49
High
265.00
About PANW
Palo Alto Networks, Inc. is a global artificial intelligence (AI) cybersecurity company, with a comprehensive portfolio of cybersecurity solutions and platforms across network, cloud, security operations, AI and Identity. Its network security platform includes Secure Access Service Edge (SASE), Next-Generation Firewalls, Cloud Delivered Security Services (CDSS), Prisma AIRS, and Strata Cloud Manager (SCM). It delivers security operations capabilities that unifies standalone Security Information and Event Management (SIEM) tools, endpoint security, security automation, cloud detection and response (CDR), as well as attack surface management (ASM) capabilities on its Cortex platform. It delivers comprehensive security across the cloud application development lifecycle through Cortex Cloud. Its Unit 42 brings together expertise across threat research, incident response, and security consulting to deliver intelligence-driven, response-ready outcomes that help customers reduce cyber risk.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Market Update: Oil Price Drop and Tech Stock Upgrades
- Oil Price Fluctuations: U.S. benchmark WTI crude prices have fallen below $90 a barrel, despite being up over 50% year-to-date, indicating market optimism regarding improved U.S.-Iran relations, yet geopolitical risks continue to loom over oil prices.
- Tech Stock Rating Changes: Intuit was upgraded to buy from hold by Rothschild & Co Redburn, with its stock rising over 30% since late February, although it remains down 28.5% for the year, reflecting a recovery in market confidence in its software products.
- Cybersecurity Stock Bounce: Morgan Stanley upgraded CrowdStrike from hold to buy, with its stock up over 20% from last month's low, highlighting the positive impact of AI technology on the cybersecurity sector and indicating optimistic market expectations for future growth.
- Hewlett Packard Enterprise's Positive Outlook: Despite memory cost pressures, the company raised its full-year earnings outlook, with reported quarterly revenues slightly below expectations but gross margins and adjusted EPS exceeding forecasts, demonstrating strong demand in the data center buildout.
See More
Surge in Demand for Cybersecurity Solutions Amid Industry Trends
- Growing Cybersecurity Demand: The significant rise in data breaches has led to a surge in demand for cybersecurity products, prompting companies like Palo Alto Networks, CrowdStrike, Fortinet, and Okta to seek comprehensive IT security solutions, thereby enhancing their business growth prospects.
- Accelerated Digital Transformation: As sectors such as education, entertainment, and healthcare increasingly rely on technology, the demand for cybersecurity solutions continues to rise, particularly with the advent of 5G and IoT, which heightens the risk of cyberattacks and further fuels the need for security products.
- Macroeconomic Challenges Impacting Investment: Global economic slowdowns and geopolitical tensions may lead enterprises to delay significant investments in large IT products, potentially negatively affecting the security market and its growth outlook in the short term.
- High Operating Costs Squeeze Profits: To remain competitive, security companies are continuously investing in research and development and marketing, and while these elevated operating expenses may compress profit margins in the near term, they also lay the groundwork for future market share growth.
See More
Kevin Mandia's Startup Armadin Raises $190 Million in Funding
- Successful Funding: Kevin Mandia's startup Armadin has raised nearly $190 million in a funding round led by Accel, with participation from notable investors like Google Ventures, providing strong financial backing for further development in the cybersecurity sector.
- AI Implementation: Armadin focuses on creating autonomous AI agents that can rapidly scan for cyber threats, with Mandia stating that this technology allows tasks that previously took days to be completed in mere minutes, significantly enhancing the efficiency and responsiveness of cybersecurity defenses.
- Team Expansion: Since its founding in September, Armadin has hired over 60 employees and begun collaborations with Fortune 100 companies, indicating a rapid scaling of operations and increased market competitiveness within a short timeframe.
- Market Trend: As the complexity and speed of cyberattacks continue to rise, more tech companies are adopting AI-driven tools, and Mandia's venture aligns with this trend, aiming to enhance cybersecurity capabilities through innovative technology.
See More
OpenAI Acquires Cybersecurity Startup Promptfoo to Enhance AI Security
- Acquisition Announcement: OpenAI has announced the acquisition of cybersecurity startup Promptfoo, which will enhance the security and governance capabilities of its Frontier platform, addressing the complexities of modern AI systems despite not disclosing the deal terms.
- Team Integration: The team from Promptfoo will join OpenAI, with CEO Ian Webster stating that this integration will accelerate the enhancement of security and governance capabilities to tackle the challenges posed by AI agents connecting to real data and systems.
- Open Source Continuation: OpenAI will continue to develop Promptfoo's open-source project, which allows developers to test various AI-related prompts and agents, comparing the performance of large language models, thereby fostering innovation in the AI sector.
- Funding Background: Promptfoo raised $18.4 million in Series A funding in July 2025, achieving a post-valuation of $85.5 million, indicating its potential and market appeal in the cybersecurity domain.
See More
CrowdStrike and 11 Additional Stocks That Have Increased in Value Daily Since the Start of the Iran War
Market Impact of the Iran War: The onset of the Iran War has led to a significant increase in oil prices, negatively affecting most stocks in the market.
Performance of Crowdstrike: Despite the overall market struggles, the conflict has positively impacted some of the worst-performing stocks of 2026, including Crowdstrike.
See More
Cybersecurity Stocks Plummet Amid AI Disruption Concerns
- Market Concerns Intensify: Cybersecurity stocks have recently plummeted amid investor fears regarding the impact of AI on these companies, with Palo Alto Networks' shares dropping 20% over the past year, reflecting uncertainty about future profitability.
- Palo Alto's Growth Potential: Palo Alto Networks saw its Prisma AI security platform's customer base triple in just one quarter, with second-quarter sales rising 15% year-over-year to $2.6 billion, and total sales projected to reach $11.3 billion by 2026, indicating strong demand and profitability in the market.
- Microsoft's Market Position: Microsoft's security revenue is estimated to reach $37 billion by 2025 and potentially $50 billion by 2030, with 1.6 million global security customers, showcasing its significant influence and customer lock-in in the cybersecurity sector.
- AI and Cloud Integration: Microsoft leverages its Azure cloud platform's 21% market share and AI technologies, such as the Copilot chatbot, to enhance its cybersecurity services, which is expected to attract more customers and strengthen its competitive edge in an increasingly complex AI threat landscape.
See More
Market Update: Oil Price Drop and Tech Stock Upgrades
- Oil Price Fluctuations: U.S. benchmark WTI crude prices have fallen below $90 a barrel, despite being up over 50% year-to-date, indicating market optimism regarding improved U.S.-Iran relations, yet geopolitical risks continue to loom over oil prices.
- Tech Stock Rating Changes: Intuit was upgraded to buy from hold by Rothschild & Co Redburn, with its stock rising over 30% since late February, although it remains down 28.5% for the year, reflecting a recovery in market confidence in its software products.
- Cybersecurity Stock Bounce: Morgan Stanley upgraded CrowdStrike from hold to buy, with its stock up over 20% from last month's low, highlighting the positive impact of AI technology on the cybersecurity sector and indicating optimistic market expectations for future growth.
- Hewlett Packard Enterprise's Positive Outlook: Despite memory cost pressures, the company raised its full-year earnings outlook, with reported quarterly revenues slightly below expectations but gross margins and adjusted EPS exceeding forecasts, demonstrating strong demand in the data center buildout.
See More
Surge in Demand for Cybersecurity Solutions Amid Industry Trends
- Growing Cybersecurity Demand: The significant rise in data breaches has led to a surge in demand for cybersecurity products, prompting companies like Palo Alto Networks, CrowdStrike, Fortinet, and Okta to seek comprehensive IT security solutions, thereby enhancing their business growth prospects.
- Accelerated Digital Transformation: As sectors such as education, entertainment, and healthcare increasingly rely on technology, the demand for cybersecurity solutions continues to rise, particularly with the advent of 5G and IoT, which heightens the risk of cyberattacks and further fuels the need for security products.
- Macroeconomic Challenges Impacting Investment: Global economic slowdowns and geopolitical tensions may lead enterprises to delay significant investments in large IT products, potentially negatively affecting the security market and its growth outlook in the short term.
- High Operating Costs Squeeze Profits: To remain competitive, security companies are continuously investing in research and development and marketing, and while these elevated operating expenses may compress profit margins in the near term, they also lay the groundwork for future market share growth.
See More
Kevin Mandia's Startup Armadin Raises $190 Million in Funding
- Successful Funding: Kevin Mandia's startup Armadin has raised nearly $190 million in a funding round led by Accel, with participation from notable investors like Google Ventures, providing strong financial backing for further development in the cybersecurity sector.
- AI Implementation: Armadin focuses on creating autonomous AI agents that can rapidly scan for cyber threats, with Mandia stating that this technology allows tasks that previously took days to be completed in mere minutes, significantly enhancing the efficiency and responsiveness of cybersecurity defenses.
- Team Expansion: Since its founding in September, Armadin has hired over 60 employees and begun collaborations with Fortune 100 companies, indicating a rapid scaling of operations and increased market competitiveness within a short timeframe.
- Market Trend: As the complexity and speed of cyberattacks continue to rise, more tech companies are adopting AI-driven tools, and Mandia's venture aligns with this trend, aiming to enhance cybersecurity capabilities through innovative technology.
See More
OpenAI Acquires Cybersecurity Startup Promptfoo to Enhance AI Security
- Acquisition Announcement: OpenAI has announced the acquisition of cybersecurity startup Promptfoo, which will enhance the security and governance capabilities of its Frontier platform, addressing the complexities of modern AI systems despite not disclosing the deal terms.
- Team Integration: The team from Promptfoo will join OpenAI, with CEO Ian Webster stating that this integration will accelerate the enhancement of security and governance capabilities to tackle the challenges posed by AI agents connecting to real data and systems.
- Open Source Continuation: OpenAI will continue to develop Promptfoo's open-source project, which allows developers to test various AI-related prompts and agents, comparing the performance of large language models, thereby fostering innovation in the AI sector.
- Funding Background: Promptfoo raised $18.4 million in Series A funding in July 2025, achieving a post-valuation of $85.5 million, indicating its potential and market appeal in the cybersecurity domain.
See More
CrowdStrike and 11 Additional Stocks That Have Increased in Value Daily Since the Start of the Iran War
Market Impact of the Iran War: The onset of the Iran War has led to a significant increase in oil prices, negatively affecting most stocks in the market.
Performance of Crowdstrike: Despite the overall market struggles, the conflict has positively impacted some of the worst-performing stocks of 2026, including Crowdstrike.
See More
Cybersecurity Stocks Plummet Amid AI Disruption Concerns
- Market Concerns Intensify: Cybersecurity stocks have recently plummeted amid investor fears regarding the impact of AI on these companies, with Palo Alto Networks' shares dropping 20% over the past year, reflecting uncertainty about future profitability.
- Palo Alto's Growth Potential: Palo Alto Networks saw its Prisma AI security platform's customer base triple in just one quarter, with second-quarter sales rising 15% year-over-year to $2.6 billion, and total sales projected to reach $11.3 billion by 2026, indicating strong demand and profitability in the market.
- Microsoft's Market Position: Microsoft's security revenue is estimated to reach $37 billion by 2025 and potentially $50 billion by 2030, with 1.6 million global security customers, showcasing its significant influence and customer lock-in in the cybersecurity sector.
- AI and Cloud Integration: Microsoft leverages its Azure cloud platform's 21% market share and AI technologies, such as the Copilot chatbot, to enhance its cybersecurity services, which is expected to attract more customers and strengthen its competitive edge in an increasingly complex AI threat landscape.
See More
