We recently published a list of Top 10 Buzzing AI Stocks to Watch Now. In this article, we are going to take a look at where Palo Alto Networks, Inc. (NASDAQ:PANW) stands against other top buzzing AI stocks to watch now.
Doug Clinton, Deepwater Asset Management co-founder, said in a latest program on CNBC that the AI trade is still intact but the market is going through a period of “doubt” and many major AI stocks have lost their momentum.
“The vibe has shifted, and I think investors, more broadly, almost want to believe the AI trade is over. They’re looking for evidence, reasons to doubt. That’s the hard part for this trade right now—momentum has lost its momentum. From our perspective, the AI trade is still real. I don’t think this boom is over; I still see two to four years ahead. But in every technology-driven boom, we go through periods of doubt. That’s a healthy part of the cycle, and we just need to work through it.”
When asked about high valuations, the analyst said many of the AI stocks have “reasonable” valuations and upside.
“If you look at the hyperscalers, I think their valuations are still largely reasonable, even though they make up a big share of the market, which concerns some investors. We’re talking about mid-20s PEs for them. Some of the more growth-driven momentum names still have upside. Their multiples look expensive now, but as they continue to grow—and that’s the key question—those multiples will actually appear higher now than they will in the future.”
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For this article, we picked 10 AI stocks the market is talking about these days. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Investors: 83
Jim Cramer in a latest program talked about Palo Alto bears and called the negative reaction from some after Palo Alto Networks, Inc. (NASDAQ:PANW)’s latest quarterly results “outrageous.”
“Last week reported PNW and there was a great miscarriage of justice. This was a monster quarter. Really great. Everything good. But there were a couple of bearish analysts and some bearish. Some short sellers got to the media. Really said it was a bad quarter. It was nonsense. Stock was down really big at one point. Then it finished down a dollar and now it’s going up. It should have been it was rated. People have to know at home if that stuff happens. Still it’s outrageous.”
In the fiscal second quarter, Palo Alto Networks (NASDAQ:PANW)’s Next-Gen Security ARR jumped 37% year-over-year to $4.78 billion.
Palo Alto Networks (NASDAQ:PANW)’s platformization strategy is working. What was this strategy?
Palo Alto Networks (NASDAQ:PANW)’s leadership has rolled out an “Accelerated Platformization and Consolidation” strategy, offering its platforms for free for a limited time in exchange for long-term commitments. With about 75 “Net New Platformizations” in the second quarter of fiscal 2025, customers are taking the deal and standardizing on its platforms.
In the latest earnings call, the management talked about the fruits of this strategy so far:
“We’re seeing some interesting behavior that reinforces our conviction that the future state of cybersecurity will have to be AI-enabled platforms that can markedly improve the speed of response. We delivered approximately 75 new platformizations in Q2, up from approximately 45 in the year ago. We now have a total of over 1,150 platformizations within our top 5,000 customers. As you might expect, many of our platformizations start with network security, and are from customers that have platformized in one area. However, our number of two-platform customers grew over 50% in Q2, and we’re seeing a number of three-platform customers up three times year over year. Also, the number of customers platformized in Cortex is up more than three times reflecting a strong excitement.
We’re excited to see the number of parts we have had success driving strategy so far, and our Q2 performance keeps us on track. To achieve our stated target of 2,500 to 3,500 platformizations by fiscal year 2030. Investors have always asked me what platformization deals look like. I want to provide a few examples based on deals we signed this quarter.”
Read the full earnings call transcript here.
Overall, PANW ranks 8th on our list of top buzzing AI stocks to watch now. While we acknowledge the potential of PANW as an investment, our conviction lies in the belief that under the radar 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 but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.