PANW's AI Threat Defense Expands: Will Protect AI be the Game Changer?

Palo Alto Networks (PANW) is tackling emerging risks as enterprises race to adopt artificial intelligence (AI). Complex AI ecosystems, which include AI models, agents, APIs, and third-party tools, are creating vulnerabilities like model manipulation, data poisoning, and prompt injection attacks. Traditional security tools aren’t designed to secure AI systems end-to-end, making full lifecycle protection a growing priority for PANW’s customers.

Most recently, Palo Alto Networks completed its $700 million acquisition of Protect AI, which aims to solve these very challenges. Management sees this as a key step to becoming the go-to provider for securing AI workloads. With Protect AI, PANW is expanding its AI security coverage from development to deployment.

Protect AI brings tools that scan AI models, manage their posture, test them for vulnerabilities (red teaming), and provide runtime protection. These capabilities will now strengthen PANW’s Prisma AI-Ready Security (Prisma AIRS) platform. Prisma AIRS is designed to give enterprises visibility and control over their AI assets across hybrid and multi-cloud environments.

Just weeks after launch, Prisma AIRS has already built an eight-figure sales pipeline. With AI infrastructure spending projected to exceed $300 billion in the next 12 months, Palo Alto Networks sees this as a key opportunity. Prisma AIRS, supported by the planned Protect AI integration, could become a foundational element of Palo Alto Networks’ platform strategy and play a key role in helping the company meet its long-term target of $15 billion in annual recurring revenues by fiscal 2030.

The Zacks Consensus Estimate for fiscal 2025 and 2026 indicates that Palo Alto Networks’ revenues will grow in the mid-teen percentage range. The consensus mark for fiscal 2025 and 2026 revenues is pegged at $9.19 billion and $10.45 billion, respectively.

How Competitors Fare Against PANW

Competitors like CrowdStrike (CRWD) and SentinelOne (S) are also gaining ground through platform expansion and AI innovation.

CrowdStrike is positioning Charlotte AI as a key part of its competitive advantage in delivering automated and scalable cybersecurity. In the first quarter of fiscal 2026, CRWD expanded Charlotte AI’s detection triage. This enables Charlotte AI to deliver autonomous expert-level triage, reasoning and response at machine speed. This is shaping Charlotte AI to be a strong differentiator for CrowdStrike in automated security.

Though comparatively a small competitor, SentinelOne in the first quarter of fiscal 2026 posted year-over-year growth of 24% in its ARR. The growth was fueled by the rising adoption of SentinelOne’s AI-first Singularity platform and Purple AI.

PANW’s Price Performance, Valuation and Estimates

Shares of Palo Alto Networks have gained 9.3% year to date compared with the Security industry’s growth of 20%.

PANW YTD Price Return Performance

From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 12.59X, lower than the industry’s average of 14.31X.

PANW Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for PANW’s fiscal 2025 and 2026 earnings implies year-over-year growth of 15.14% and 11.27%, respectively. The estimates for fiscal 2025 have remained unchanged over the past 60 days, while the estimates for fiscal 2026 have been revised downward by a penny over the past 30 days.

Palo Alto Networks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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