TLDR
- William Blair named Palo Alto Networks its top cybersecurity pick, citing AI-driven demand and strong firewall sales
- PANW stock rose 1% to $352.24 in premarket Tuesday after falling 2.8% Monday
- Customers are pulling forward firewall purchases ahead of expected price increases and supply chain pressure
- The release of Anthropic’s Mythos model and Nvidia’s Blackwell architecture has pushed cybersecurity up the priority list for companies
- 41 analysts have revised PANW earnings estimates upward; InvestingPro’s Fair Value model flags the stock as currently overvalued
Palo Alto Networks stock ticked up 1% to $352.24 in premarket trading Tuesday, a day after closing down 2.8%. The stock is up 89% in 2026 and is on pace to close higher for a fifth straight month.
Palo Alto Networks, Inc., PANW
William Blair analyst Jonathan Ho named PANW his firm’s top pick in cybersecurity on Monday, pointing to strong demand conditions and what he sees as a clear runway for growth.
The catalyst is straightforward: companies are worried about AI-powered hacking. IBM flagged the same concern last week, noting its clients were actively shifting spend toward cybersecurity as more capable AI models came to market.
Ho said customers are rushing to buy firewalls now, ahead of expected price increases, with supply chain pressures building in the background.
“We are seeing a dramatic shift in prioritization as customers rush to purchase firewalls ahead of expected price increases and as supply chain challenges loom in the background,” Ho wrote.
William Blair pointed specifically to Anthropic’s Mythos model and Nvidia’s next-generation Blackwell AI architecture as catalysts pushing cybersecurity higher on corporate priority lists.
Vulnerability management has moved up the agenda as a direct result of Mythos hitting the market. Existing projects around securing AI and zero trust have taken a step back, as Mythos has pulled both attention and budget.
Firewall and Vulnerability Demand Leading the Pack
Firewalls and vulnerability management are the clearest beneficiaries right now. Endpoint security and AI security tools are seeing softer demand by comparison.
Tenable and Qualys are also flagged as likely beneficiaries of the Mythos-driven push into patch management. William Blair also heard positive commentary on Fortinet from resellers.
Ho said overall cybersecurity spending was strong through Q2 and described the environment as “robust.”
“We believe the strong near-term performance in security stocks following last quarter’s declines suggests that cybersecurity is now perceived as a beneficiary of AI,” Ho wrote.
Palo Alto, according to Ho, is taking market share and benefiting from customers deciding to act early as pricing is expected to rise and lead times build.
Margin Pressure a Risk to Watch
Not everything is clean. Ho flagged that rising hardware firewall component pricing could pressure margins. That’s worth watching given how much of the near-term demand thesis is tied to firewall pull-through.
William Blair sees upside to both PANW’s annual recurring revenue and product revenue, though margin headwinds could complicate the story.
The $284 billion company is trading near its 52-week high of $368.80. The stock has gained 92% over the past six months.
InvestingPro data shows 41 analysts have revised earnings estimates upward ahead of the next reporting period. However, InvestingPro’s Fair Value model currently flags PANW as overvalued.
Multiple firms have raised price targets recently. Tigress Financial set a $430 target. Evercore ISI is at $415. Needham sits at $425. Cantor Fitzgerald holds an Overweight rating with a $340 target, noting PANW revenue beat consensus by 2%.
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