Palo Alto Networks’ PANW XSIAM business continued to grow rapidly in fiscal 2026. XSIAM ended the fourth quarter of fiscal 2026 with more than $700 million in annual recurring revenues (ARR), which increased 70% year over year and surpassed 1,000 customers. XSIAM was also a key growth driver for PANW’s Cortex business, which generated $1.92 billion in fiscal 2026 revenues, up 25% year over year.
XSIAM is benefiting from PANW’s platform approach. Customer telemetry is already available within XSIAM, allowing the company to add new capabilities without requiring customers to go through separate product integrations. The majority of XSIAM customers are using multiple modules, including exposure management and cloud security, which gives PANW more opportunities to expand within existing accounts.
The company is also positioning XSIAM to help customers respond to faster and more complex cyber threats. PANW said AI-driven attacks can identify vulnerabilities much faster, increasing the need for real-time detection and response. XSIAM supports this strategy by bringing security data together on a unified platform. For instance, a premier IT service provider included XSIAM in a $72 million transaction as part of a broader platformization deal. The customer made eight-figure investments across Network Security, Cortex and Idira.
PANW also sees AI deployment as a long-term demand driver for security operations. The growing use of autonomous agents is expected to create more network traffic, data and machine identities that enterprises will need to monitor and protect. Overall, XSIAM has several factors supporting continued growth, including its expanding customer base, multi-module adoption and rising demand for real-time security. The Zacks Consensus Estimate for fiscal 2027 and 2028 indicates revenue growth of around 23.4% and 14.4%, respectively.
How Competitors Fare Against PANW
Competitors like CrowdStrike CRWD and SentinelOne S are also gaining ground through platform expansion and AI innovation.
CrowdStrike ended its second quarter of fiscal 2027 with $5.84 billion in ARR, reflecting 25% year-over-year growth. The robust increase was fueled by the growing adoption of CrowdStrike’s Falcon Flex subscription model.
Though comparatively a small competitor, SentinelOne posted second-quarter fiscal 2027 year-over-year growth of 22% 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 jumped 80.9% in the year-to-date period compared with the Zacks Security industry’s appreciation of 71.8%.
PANW’s YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Palo Alto Networks trades at a forward price-to-sales ratio of 18.97X compared with the industry’s average of 17.14X. The Zacks Value Score of F suggests that PANW stock is overvalued.
PANW Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2027 and 2028 earnings implies year-over-year growth of 8.6% and 18.7%, respectively. The estimates for fiscal 2027 and 2028 have been revised up by 6 cents and 2 cents, respectively, over the past seven days.
Image Source: Zacks Investment Research
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.
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This article originally published on Zacks Investment Research (zacks.com).