Shares of Palo Alto Networks fell on Wednesday, even after the cybersecurity company reported better-than-expected quarterly results and raised its full-year outlook. However, the stock is no stranger to post-earnings dips and usually recovers losses quickly. This time should be no different. Revenue for the company’s fiscal 2026 first quarter increased 16% year over year to $2.48 billion, exceeding the Wall Street consensus estimate of $2.46 billion, according to LSEG. Adjusted earnings per share (EPS) increased 19% to 93 cents in the quarter, ahead of the 89-cent LSEG consensus estimate. Shares fell more than 3% in after-hours trading to about $194. It was up nearly 10% for the year entering earnings. PANW 1Y mountain Palo Alto 1-Year Return Bottom line “As many of you saw last week, with one of the major AI platforms, AI hackers aren’t a future threat; they’re here now. This is the first reported case of an AI agent autonomously conducting a large-scale nation-state cyberattack,” CEO Nikesh Arora said on the earnings call, referencing a hacker who used Anthropic’s Claude chatbot to launch a cybercrime. “The attacker was able to manipulate an agent to take steps on its own with minimal human intervention,” Arora continued. “This is a turning point, proof that attackers are already weaponizing AI agents at scale, even more importantly, they are able to attack fast and will be able to exfiltrate faster.” We’re starting off our earnings recap with this story because it highlights why Palo Alto’s security platform wins in this new world. Bad actors are becoming more sophisticated because of artificial intelligence, and Palo Alto’s platform approach makes it one of the few providers capable of detecting, protecting, and remediating threats. “Fragmentation creates friction, which in turn causes latency,” Arora said. “Latency is a critical enemy of real-time cybersecurity. This is the backdrop that informs our strategy as we go forward.” For the quarter, Palo Alto Networks posted beats across every single key metric: revenue, adjusted EPS, adjusted free cash flow margin, next-generation security annual recurring revenue (ARR), and total remaining performance obligation (RPO). On top of that, the company raised its full-year revenue and adjusted earnings per share outlook, which is something you don’t always see from companies one quarter into the fiscal year. There’s real momentum here, and we expect that will continue after the company closes its pending acquisition of CyberArk. Some of the company’s newer products from past acquisitions are also gaining traction quickly. The number of customers using its Secure Browser is up more than 7 times year over year, and Prisma Air’s deals were up more than 100% quarter over quarter. So why is the stock down 3%? Investor expectations are always high for these top-performing cybersecurity stocks, leading to post-earnings pullbacks that don’t last long. The market quickly recognizes that these companies…
Read More: Palo Alto dips after strong quarter — why we’re bullish on next year