Palo Alto Networks (PANW) Plays a Role in Safeguarding the Modern Digital Economy. Here's How

Mairs & Power, an investment advisor, released the third-quarter 2025 investor letter for the “Mairs & Power Growth Fund.” A copy of the letter can be downloaded here. In 2025, the market dominance continues to concentrate on a small group of mega-cap stocks associated with artificial intelligence (AI). The fund gained 7.99% in the third quarter, broadly consistent with the S&P 500 Total Return (TR) Index’s 8.12% return and ahead of its peer group, the Morningstar Large Blend index’s 6.93% gain. YTD, the fund is up 10.12% trailing the S&P 500 TR at 14.83% and the peer group at 13.06%. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its third-quarter 2025 investor letter, Mairs & Power Growth 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 -5.77%, and its shares lost 3.57% of their value over the last 52 weeks. On December 10, 2025, Palo Alto Networks, Inc. (NASDAQ:PANW) stock closed at $192.96 per share, with a market capitalization of $134.493 billion.

Mairs & Power Growth Fund stated the following regarding Palo Alto Networks, Inc. (NASDAQ:PANW) in its third quarter 2025 investor letter:

"During the third quarter, we added two new positions to the portfolio: Cognex Corporation and Palo Alto Networks, Inc. (NASDAQ:PANW). Palo Alto Networks is one of the world’s leading cybersecurity companies, helping organizations protect themselves from an ever-expanding array of digital threats. The company offers a comprehensive suite of solutions spanning network security, cloud security, and security operations, with each well-positioned to benefit from the rising frequency and severity of cyberattacks. The growing cost of cybersecurity lapses, including punitive regulatory fines and reputational damage, has made digital defense a top corporate priority. As enterprises have migrated to the cloud, they have inadvertently created new attack vectors that demand more integrated protection. In this evolving landscape, IT security teams are increasingly seeking platforms that deliver holistic, end-to-end coverage like Palo Alto provides. At the same time, AI has empowered bad actors to automate and personalize attacks, further intensifying the threat environment and underscoring the critical role that Palo Alto Networks plays in safeguarding the modern digital economy."

Palo Alto Networks, Inc. (NASDAQ:PANW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 85 hedge fund portfolios held Palo Alto Networks, Inc. (NASDAQ:PANW) at the end of the third quarter, which was 77 in the previous quarter. In Q3 2025, Palo Alto Networks, Inc. (NASDAQ:PANW) reported total revenue of $2.47 billion representing 16% growth compared to Q3 2024. 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 best large cap stocks to invest in for the long term. In addition, please check out our hedge fund investor letters Q3 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.