Is PANW a good stock to buy? We came across a bullish thesis on Palo Alto Networks, Inc. on MTC’s Substack. In this article, we will summarize the bulls’ thesis on PANW. Palo Alto Networks, Inc.’s share was trading at $147.02 as of March 27th. PANW’s trailing and forward P/E were 90.53 and 44.25 respectively according to Yahoo Finance.
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Palo Alto Networks, Inc. provides cybersecurity solutions in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. PANW delivered another strong quarter in fiscal year 2026, driven by accelerating growth in its Next-Generation Security (NGS) business and robust platform adoption. Q2 revenue reached $2.594 billion, up 15% year-over-year, with product revenue of $514 million and subscription and support revenue of $2.08 billion. GAAP net income was $432 million ($0.61 per share), while non-GAAP net income rose to $732 million ($1.03 per share), maintaining a non-GAAP operating margin above 30% for the third consecutive quarter.
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Growth was led by NGS ARR, which expanded 33% year-over-year to $6.3 billion, and RPO of $16 billion, reflecting strong multi-year contract visibility. Enterprise customers continue to integrate fragmented security solutions into PANW’s platform, with AI-driven modernization further accelerating adoption.
Strategic acquisitions of CyberArk and Chronosphere position the company in adjacent areas of identity security and observability, reinforcing its leadership in AI cybersecurity. The company’s profitable growth strategy leverages scale and operational efficiency while sustaining heavy investment in R&D and sales. For Q3 FY26, PANW anticipates revenue of $2.941–$2.945 billion, NGS ARR of $7.94–7.96 billion, and RPO of $17.85–17.95 billion, signaling a meaningful acceleration from Q2.
Full-year guidance projects revenue of $11.28–11.31 billion, NGS ARR of $8.52–8.62 billion, and non-GAAP operating margin near 29%, alongside a 37% free cash flow margin. While integration risks from acquisitions and reliance on non-GAAP metrics remain, the company’s high-growth, high-margin engine, platform adoption, and AI initiatives support its position as a leading compound-growth cybersecurity stock. Market valuation reflects optimism, making execution of growth and M&A integration the key determinants of near-term risk-reward.
Previously, we covered a bullish thesis on Palo Alto Networks, Inc. PANW by Magnus Ofstad in October 2024, which highlighted the company’s leadership in AI-driven cybersecurity, platformization across network, cloud, and operations, and the strong growth of its next-generation security (NGS) services. PANW’s stock price has depreciated by approximately 59.67% since our coverage, reflecting investor concerns over acquisition costs and lowered profit guidance despite continued revenue growth. MTC’s Substack shares a similar view but emphasizes 2026 operational performance, accelerating NGS ARR growth, and the strategic impact of CyberArk and Chronosphere acquisitions.
Palo Alto Networks, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 86 hedge fund portfolios held PANW at the end of the fourth quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of PANW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PANW and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
