12 AI Stocks on Analysts’ Radar

9. Palo Alto Networks, Inc. (NASDAQ:PANW)

Number of Hedge Fund Holders: 64

Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity. One of the most notable analyst calls on Wednesday, May 21, is for Palo Alto Networks. Goldman Sachs analyst Gabriela Borges raised the price target on the stock to $231.00 (from $215.00) while maintaining a “Buy” rating. Analyst Gabriela Borges expressed optimism about the company’s strategic positioning in the industry.

The analyst noted Palo Alto’s mixed performance over the quarters due to industry spending normalization, increased cloud competition, and changes in the company’s business model. Despite these factors, the company is recognized to be in a good position to lead strategic enterprise security discussions and consolidate spending in the medium term, alongside Crowdstrike and Microsoft. Borges also noted that the field of next-generation AI security vendors will likely undergo consolidation over time, and that Palo Alto is likely to benefit from this.

“We maintain a Buy rating on the stock. Fundamentals have been mixed over the past 4+ quarters, in our view due to industry normalization in network security industry spending, competition in cloud, and moving pieces to the model (such as the mix of financing deals). However, we continue to view Palo Alto as one of only three companies well positioned to have strategic enterprise security conversations to consolidate spend over the medium term, with CrowdStrike and Microsoft the other two. While we expect to see a number of next-gen vendors in AI security, we ultimately believe that this field will consolidate over time in favor of leaders such as Palo Alto, that have the ability and willingness to invest in technology leadership, outsource R&D via M&A, and realize attractive unit economics from cross sell.”