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.
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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: 163.210
Low
157.00
Averages
232.49
High
265.00
Current: 163.210
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.
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See More
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- Wells Fargo Price Target Increase: Goldman Sachs raised Wells Fargo's price target from $93 to $96, with analysts stating the stock is well-positioned ahead of earnings; Jim Cramer advised against trimming positions at the current price of around $81, noting it is far from its all-time high.
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- Cybersecurity Outlook: While Jim Cramer acknowledges Zscaler's potential in cybersecurity, he prefers recommending CrowdStrike and Palo Alto Networks, indicating a lack of confidence in Zscaler's market position.
- Investment Advice: Cramer advises investors holding Zscaler to gradually lighten their positions during market rebounds, emphasizing that holding too many similar stocks could expose them to greater risks and pain.
- AI Impact Assessment: The market generally perceives cybersecurity as vulnerable to AI disruption, although Cramer disagrees, asserting that Zscaler should not have been hit so hard, highlighting differing views on AI's impact on cybersecurity.
See More
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- CEO Stock Purchase: Palo Alto Networks CEO Nikesh Arora purchased $10 million worth of stock following a 33% decline in share price, indicating strong confidence in the company's future value, which may boost investor sentiment and stabilize the stock price.
- Market Reaction Analysis: Despite a general decline in cybersecurity stocks due to concerns over generative AI, analysts suggest that the rise of AI could actually increase demand for cybersecurity software, presenting growth opportunities for Palo Alto and enhancing its market position.
- Successful Platform Strategy: As of the end of Q2, Palo Alto Networks reported 1,550 platform customers, a 35% year-over-year increase, indicating sustained demand for its software solutions, with a high customer retention rate of 119%, reflecting increased customer reliance on its services.
- Strong Financial Performance: While overall revenue growth is hampered by legacy hardware business, Palo Alto's software solutions grew by 33% last quarter, indicating rapid expansion in high-margin areas, and positioning the company for further market share growth and improved financial performance.
See More
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- Insider Buying Signal: CEO Nikesh Arora's $10 million stock purchase following a 33% decline in Palo Alto Networks' share price indicates strong confidence in the company's future value, potentially boosting market sentiment towards the stock.
- Market Reaction Analysis: Despite a general decline in cybersecurity stocks due to concerns over generative AI, Palo Alto Networks is well-positioned to benefit from increased demand for comprehensive cybersecurity solutions as enterprises face growing threats, suggesting a strategic advantage.
- Platform Strategy Success: The company reported 1,550 platform customers as of Q2, a 35% year-over-year increase, reflecting the effectiveness of its platformization strategy in enhancing customer retention and achieving a net revenue retention rate of 119%, indicating growing customer reliance on its services.
- Software Business Growth: While overall revenue growth is hampered by legacy hardware, Palo Alto's high-margin software solutions grew by 33% last quarter, demonstrating strong market competitiveness in addressing AI-driven cyber threats and positioning the company for accelerated future growth.
See More
