What Makes Palo Alto Networks (PANW) an Investment Choice?

Sands Capital, an investment management company, released its “Sands Capital Technology Innovators Fund” Q2 2025 investor letter. A copy of the letter can be downloaded here. Technology Innovators focus on pioneering businesses worldwide that serve as key drivers or beneficiaries of significant long-term changes driven by technology. The fund returned 26.0% (net) in the second quarter compared to a 21.9% return for the benchmark, MSCI ACWI Info Tech and Communication Services Index. Easing geopolitical concerns, renewed AI optimism, resilient macroeconomic data, strong corporate earnings, and technical tailwinds boosted the markets for a quick recovery in the quarter. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its second quarter 2025 investor letter, Sands Capital Technology Innovators Fund highlighted stocks such as Palo Alto Networks, Inc. (NASDAQ:PANW). Palo Alto Networks, Inc. (NASDAQ:PANW) is a global cybersecurity solutions provider. The one-month return of Palo Alto Networks, Inc. (NASDAQ:PANW) was 0.29%, and its shares gained 23.11% of their value over the last 52 weeks. On July 24, 2025, Palo Alto Networks, Inc. (NASDAQ:PANW) stock closed at $201.16 per share, with a market capitalization of $134.133 billion.

Sands Capital Technology Innovators Fund stated the following regarding Palo Alto Networks, Inc. (NASDAQ:PANW) in its second quarter 2025 investor letter:

"Palo Alto Networks, Inc. (NASDAQ:PANW) is a leading cybersecurity platform. It has leveraged its leading position in firewalls to build strong positions in key emerging segments such as Secure Access Service Edge (SASE), Security Information and Event Management (SIEM), and cloud security. These newer segments collectively make up its Next-Generation Security revenue which is now over $5B in annual run rate revenue with a significant growth runway. We expect cyber security will remain a top priority for customers and continued share gains will support sustainable above average revenue growth. Additionally, we expect AI will be a key factor driving cybersecurity decisions on multiple levels. The usage of AI can make adversaries more effective, can expand the attack surface, and require more advanced security. We believe Palo Alto is one of only a few companies with the necessary data and installed base to thrive in this environment."

Palo Alto Networks, Inc. (NASDAQ:PANW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 77 hedge fund portfolios held Palo Alto Networks, Inc. (NASDAQ:PANW) at the end of the first quarter compared to 83 in the previous quarter. While we acknowledge the potential of Palo Alto Networks, Inc. (NASDAQ:PANW) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Palo Alto Networks, Inc. (NASDAQ:PANW) and shared the list of stocks Jim Cramer recently discussed. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.