PANW Bets on Prevention-First ASPM: Will it Drive Platform Adoption?

Palo Alto Networks PANW has expanded its Cortex Cloud platform with a new prevention-first Application Security Posture Management (ASPM) module. The new ASPM module aims to stop risks before code hits production and also supports an open ecosystem of partners, including Black Duck, Checkmarx, GitLab, HashiCorp, Semgrep, Snyk and Veracode.

On fourth-quarter fiscal 2025 earnings call, management stated that ASPM is built natively into Cortex Cloud and acts as a single source of truth, correlating data from native and third-party tools across the AI app lifecycle. This gives customers a single view of application risks without forcing developers to switch tools. Moreover, Cortex Cloud’s ASPM is part of Palo Alto Networks’ broader platformization strategy, where multiple security functions are integrated into a unified system.

Cortex Cloud brings together Palo Alto Networks’ cloud native application protection platform (CNAPP), cloud detection and response (CDR), and the company’s AI-powered SOC platform, XSIAM. The platform allows customers to secure code during development and to protect workloads in production. It has also achieved FedRAMP High Authorization, reflecting the U.S. public sector’s trust in Palo Alto Networks’ security solutions.

In the fourth quarter of fiscal 2025, Palo Alto Networks’ combined Annual Recurring Revenue (ARR) for Cortex and Cloud grew about 25% year over year, reflecting strong momentum for the platform, where ASPM will now be offered. Moreover, Palo Alto Networks ended its fourth quarter with a net retention rate of 120% among its platformized customers, with near-zero churn .

Large platform commitments are also increasing. During the fourth quarter, customers with more than $5 million and $10 million ARR grew about 50% year over year, while those above $20 million ARR increased 80% year over year. The company also closed a $100 million-plus deal with a global consulting firm that is now fully platformized, contributing $50 million in ARR.

This shows that the platform customers are sticky, underpinning the growth potential for newer modules like ASPM, which is expected to continue driving its top-line growth. The Zacks Consensus Estimate of $10.5 billion for fiscal 2026 revenues indicates year-over-year growth of 13.8%.

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, CrowdStrike 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 1.4% year to date compared with the Security industry’s growth of 7.3%.

PANW YTD Price Return Performance

From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 11.52X, slightly lower than the industry’s average of 11.93X.

PANW Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 and 2027 earnings implies year-over-year growth of 9.3% and 15.2%, respectively. The estimates for fiscal 2026 earnings have been revised upward over the past 30 days, while the estimates for fiscal 2027 have been revised downward over the past seven 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research