Buy Palo Alto Networks Stock? Earnings Reveal a $9.1B AI Security Boom

Palo Alto Networks, Inc. PANW delivered strong quarterly results and a solid outlook, reinforcing its competitive edge against peers, including CrowdStrike Holdings, Inc. CRWD and Fortinet, Inc. FTNT. So, let’s take a closer look at the results and the key factors that make PANW stock a buy now.  

PANW’s $9.1B NGS ARR Highlights Strong AI Security Demand 

Palo Alto Networks reported $9.1 billion in Next-Generation Security ARR (NGS ARR) in the fiscal fourth quarter of 2026, up 63% year over year, as mentioned in the company’s Sept. 1 press release.  

Management also revealed that almost $1 billion in net new NGS ARR was added in the fiscal fourth quarter alone. This means the company is not only expanding its existing customer base but also seeing rapid adoption of Palo Alto Networks’ newer security platforms. 

The strong ARR growth is particularly noteworthy, as it highlights Palo Alto Networks’ potential for sustained revenue generation in the future. Meanwhile, the company’s remaining performance obligations increased by 34% to $21.2 billion in the fiscal fourth quarter, providing the company with substantial forward revenue visibility. 

Looking ahead, Palo Alto Networks expects NGS ARR of $9.54 billion to $9.56 billion in the fiscal first quarter of 2027, up around 63% year over year. For the fiscal year 2027, the company projects NGS ARR of $11.075 billion to $11.175 billion, representing 22-23% year-over-year growth.  

This robust guidance suggests that Palo Alto Networks’ growth story extends beyond a strong quarter, with management expecting substantial growth in the artificial intelligence (AI)/cybersecurity opportunity in the years ahead. 

Strong Growth, Profitability and Attractive Valuation Make PANW a Buy 

Given Palo Alto Networks’ scale, its remarkable NGS ARR growth and strong FY2027 support a bullish case for PANW stock, making it a compelling buy now.  

Importantly, Palo Alto Networks isn’t growing at the expense of profitability. The company’s non-GAAP operating income reached $1 billion in the fiscal fourth quarter, up roughly 30% year over year, while adjusted free cash flow totaled a healthy $1.3 billion.

Together, strong growth, recurring revenue, improving profitability, and robust cash generation strengthened Palo Alto Networks’ long-term investment case. Moreover, from a valuation perspective, Palo Alto Networks appears attractive, with its forward price-to-earnings ratio of 88 below the Security industry’s average of 147.47.

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Palo Alto Networks currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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