Can Cortex XSIAM Become Palo Alto Networks' Next Major Growth Engine?

Palo Alto Networks PANW is seeing steady growth in Cortex Extended Security Intelligence and Automation Management (XSIAM), its security operations platform. In the first quarter of fiscal 2026, the company said Cortex XSIAM continued to grow strongly. The platform now has about 470 customers. On average, each customer spends more than $1 million in annual recurring revenue (ARR). This shows that Cortex XSIAM is mainly used by large enterprise customers. 

Deal sizes are getting larger. During the quarter, Palo Alto Networks signed its biggest Cortex XSIAM deal so far. A large U.S. telecom company agreed to an $85 million contract. Management said customers are choosing Cortex XSIAM to replace older security tools. The goal is to reduce the number of products they manage and improve response times. More than 60% of customers using Cortex XSIAM have reduced their median time to respond from days or weeks to just minutes. 

Cortex XSIAM also supports Palo Alto Networks’ platform strategy. Customers using XSIAM often add other Palo Alto Networks products over time. This increases overall spending per customer. Platform deals linked to Cortex XSIAM more than doubled compared with last year. This shows that Cortex XSIAM helps bring customers deeper into the company’s broader platform. 

Looking ahead, Palo Alto Networks plans to add more automation and AI features to Cortex XSIAM, including agent-based tools through the AgentiX platform. The main question is whether growth can continue. Current data shows rising customer count, larger deals, and clear customer benefits. If these trends continue, Cortex XSIAM could become an important growth driver for Palo Alto Networks. The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates revenue growth of around 14.1% and 13.3%, respectively.

How Competitors Fare Against PANW

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

CrowdStrike armed Falcon Next-Generation Security Information and Event Management (SIEM) with features like fast search, AI integration, a cloud-native offering with scalability of up to one petabyte of data ingestion per day. In the third quarter of fiscal 2026, Next-Generation SIEM posted record net new ARR, showing that more customers are choosing it over older SIEM tools that are costly and slow.

Though comparatively a small competitor, SentinelOne posted third-quarter fiscal 2026 year-over-year growth of 23% 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 & Estimates

Shares of Palo Alto Networks have lost 10.6% in the past three months compared with the Zacks Security industry’s decline of 6.9%.

PANW 3-month Price Return Performance

From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 11.8X compared with the industry’s average of 11.9X.

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 14.7% and 12.5%, respectively. Estimates for fiscal 2026 and 2027 have been revised upward by 4 cents and 2 cents, respectively, over the past 30 days.

 Palo Alto Networks currently carries a Zacks Rank #4 (Sell).

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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