Zscaler Earnings Report Triggers Palo Alto Networks Stock Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: NASDAQ.COM
- Stock Price Impact: Palo Alto Networks saw its stock decline by 3.2% on Wednesday, with an intraday drop of 5.3%, as the market reacted negatively to Zscaler's earnings report, indicating investor concerns about the overall outlook for the cybersecurity sector despite no specific negative news for Palo Alto.
- Zscaler Earnings Reaction: Zscaler reported non-GAAP earnings of $1.08 per share and revenue of $850.48 million, both exceeding Wall Street expectations; however, its stock plummeted by 31.5%, reflecting disappointment in future growth projections, which subsequently affected Palo Alto's market performance.
- Market Expectation Pressure: Palo Alto is set to release its Q3 2026 fiscal results on June 2, with high expectations for revenue growth of 28.5% to approximately $2.945 billion, yet investors are concerned about potential valuation pullbacks even if results exceed expectations, given the current market sentiment.
- Investor Confidence Shaken: Although Palo Alto remains up about 35% in 2026 trading, the fallout from Zscaler's report has led to increased skepticism regarding Palo Alto's future performance, especially after it failed to make the Motley Fool's list of top recommended stocks, further exacerbating market unease.
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Analyst Views on PANW
Wall Street analysts forecast PANW stock price to fall
34 Analyst Rating
28 Buy
5 Hold
1 Sell
Strong Buy
Current: 257.770
Low
157.00
Averages
232.49
High
265.00
Current: 257.770
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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- Technology Integration Strategy: MASQ will become a core component of the AIQu™ platform, which aims to provide a security-first, privacy-preserving, quantum-resilient AI infrastructure, further enhancing the company's competitiveness in the rapidly evolving AI market.
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- Surging Market Demand: Gartner projects that AI cybersecurity spending will grow at a 74% compound annual rate from 2024 to 2029, highlighting the urgent need for governance in AI agent security, prompting companies to increase their investments in this area.
- Patent Application Initiated: The company has begun the patent process for MASQ, marking its strategic positioning in the AI agent governance space; although still in development, this initiative underscores its commitment to future market opportunities.
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- Views on Other Companies: Burry sees Intuit, Autodesk, and Unity Software as operationally strong but avoids them due to high valuations, reflecting his cautious stance on market pricing.
- Concerns in Cybersecurity Sector: Burry expresses skepticism towards Zscaler, Palo Alto Networks, and CrowdStrike, citing vulnerabilities to frontier AI models, emphasizing the fragility of cybersecurity firms in the AI era.
See More
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- Analyst Rating Upgrade: Benchmark has maintained its 'Buy' rating on Palo Alto Networks while increasing its price target, reflecting a strong cybersecurity environment and growing demand driven by AI adoption, further boosting market confidence.
- Positive Market Reaction: Although shares initially surged 4.1% before cooling to $257.73, still up 3.7% from the previous close, this indicates the market's recognition of the news's significance, even if it doesn't fundamentally alter perceptions of the business.
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