We recently published a list of 12 AI Stocks on Analysts’ Radar. In this article, we are going to take a look at where Palo Alto Networks, Inc. (NASDAQ:PANW) stands against other AI stocks on analysts’ radar.
The recently imposed US sanctions on chip use have angered China. In recent news, the country has stated that it may take legal action against any individual or organization who are found assisting or implementing U.S. measures that advise companies against using their advanced semiconductors.
According to the U.S. published guidance, companies risk violating export controls if found using Ascend AI chips from Shenzhen-based Huawei. In response, China’s commerce ministry said there could be “corresponding legal liabilities” against those involved in implementing U.S. measures and that it constitutes “discriminatory restrictive measures” against Chinese firms.
READ ALSO: 10 AI Stocks Investors Are Watching Today and 15 AI Stocks Surging on News and Analyst Ratings.
The sanctions are seemingly a new strategy adopted by the US to curb China’s progress in the AI arms race. The world is yet to watch the success of this strategy as opposed to the AI diffusion rule imposed earlier, which the world came to know had failed miserably after the arrival of DeepSeek.
Even Jensen Huang has deemed the AI diffusion rule to be a failure.
“All in all, the export control was a failure. The fundamental assumptions that led to the AI diffusion rule in the beginning, in the first place, has been proven to be fundamentally flawed.”
In fact, the sales block advanced AI chips to China, forcing companies to buy semiconductors from Chinese designers. It also pushed the country to invest aggressively in a robust supply chain that doesn’t rely on manufacturers outside the country.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.
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).
A cutting-edge computer lab full of IT experts monitoring the security of multiple systems.
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.”
Overall, PANW ranks 9th on our list of AI stocks on analysts’ radar. While we acknowledge the potential of PANW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PANW and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
