Palo Alto Networks: Steady performance but stagnant stock price, should I enter a position now or wait?

Financial Report Highlights

Palo Alto Networks(PANW) released its Q1 financial report last week, with revenue growing 16% year-on-year to $2.47 billion, exceeding expectations. Among them:

• Next Generation Security ( NGS ) Revenue: Annual Recurring Revenue ( ARR ) increased by 29% to $5.85 billion, with SASE platform ARR growing by 34% to over $1.3 billion.
• Platform Strategy shows results: 16 new platform orders added in Q1, XSIAM platform orders doubled, with the largest single order reaching 100 million USD.
• Remaining performance obligations ( RPO ) increased by 24% to $15.5 billion, providing support for future growth.
• Adjusted EPS increased by 19% year-on-year to $0.93, exceeding guidance.

Merger Mania Mode Activated

In the case where the acquisition of CyberArk(CYBR) has not been completed, Palo Alto has announced the acquisition of the observability platform Chronosphere( for $3.35 billion, with an annual recurring revenue of $160 million and a triple-digit growth rate). The market size aimed at by the company in the observability sector is $24 billion.

Clearly, Palo Alto is turning to the role of industry integrator, accelerating platform construction through M&A.

Why is the stock price not moving at all?

In the past year, PANW has basically not increased, and the reason is very straightforward: overvaluation.

According to the expected calculation for the fiscal year 2026, the stock's price-to-sales ratio ( P/S ) reaches 12 times — benchmarked against a moderately high revenue growth rate ( of 16% ), this multiple is clearly not cheap. The analysts' conclusion is: while the strategy is sound, it is not worth chasing the high unless the stock price drops further.

Core Contradiction: The growth rate is good, but the valuation has compressed the rebound space for stock prices. Whether platformization and mergers can open up a new situation depends on subsequent execution.