Key facts
- Palo Alto Networks stock declined amid growth concerns.
- Analysts attribute the stock drop to profit-taking, AI timing, and reporting changes.
- The company had previously raised fiscal 2026 revenue and profit per share forecasts.
- Strong demand for AI-driven cybersecurity products fueled previous growth.
- Third-quarter revenue grew 31% year-on-year to $3 billion.
Palo Alto Networks stock experienced a significant decline due to concerns regarding the company's financial performance and future growth prospects. Previously, the company had raised its fiscal 2026 revenue forecast to between $11.415 billion and $11.425 billion, and its adjusted profit per share forecast to $3.77-$3.79. This strong performance was driven by a 31% year-on-year revenue growth to $3 billion in the third quarter, exceeding expectations. The demand was fueled by enterprise spending on AI-driven cybersecurity solutions. The company's backlog grew 36% to $18.4 billion, and shares had previously risen 7.4% in extended trading. The company projects fourth-quarter revenue between $3.345 billion and $3.355 billion and targets a 40% free cash flow margin for fiscal 2028. Analysts attribute the recent stock drop to profit-taking, the timing of AI contributions, and changes to reporting conventions.