NEW YORK, Feb 19, 2026, 12:00 (EST) — Regular session
- Palo Alto Networks (PANW) slid roughly 1.7% around midday.
- Lower profit guidance, linked to acquisition costs, kept investors’ attention.
- Next: updates on integration, plus any hints about growth in subscriptions.
Palo Alto Networks Inc (PANW) slipped 1.7% to $149.80 on Thursday, after bouncing between $148.20 and $153.88 in earlier trading. By late morning, roughly 6.6 million shares had changed hands.
Palo Alto’s drive to transform itself from a firewall specialist into a full-scale cybersecurity platform remains under scrutiny. Investors now have to decide if the company can integrate its expanding lineup quickly enough to defend its margins.
The company outpaced forecasts in its fiscal second quarter ended Jan. 31, according to a filing, posting a 15% revenue bump to $2.59 billion and non-GAAP earnings of $1.03 a share—excluding items like stock-based compensation and acquisition charges. For fiscal 2026, the outlook calls for adjusted EPS between $3.65 and $3.70 and revenue in the $11.28 billion to $11.31 billion range. Acquisition-related expenses climbed to $24 million, compared with $10 million in the prior year. CEO Nikesh Arora flagged “continued strength in platformizations” as AI spending shifts the security landscape, while CFO Dipak Golechha highlighted a “third straight quarter” of 30%-plus adjusted operating margin. (SEC)
Even so, the company’s profit outlook for the third quarter disappointed. Palo Alto projected adjusted earnings of 78 to 80 cents a share—short of the 92-cent consensus, according to the Wall Street Journal. (Wall Street Journal)
Analysts tracking Palo Alto zeroed in on the company’s mounting deal flow as the key variable. “The profitability cut is mostly due to the firm’s acquisitions,” said Morningstar’s Malik Ahmed Khan. Truist Securities, for its part, wrote it would “lean in on weakness.” The company has been snapping up identity and observability firms—among them, the $25 billion CyberArk buy and a $3.35 billion move for Chronosphere. (Reuters)
Deal activity isn’t slowing down. This week, Palo Alto announced plans to buy Israeli startup Koi, targeting risks tied to AI “agents”—software designed to act on behalf of users. “AI agents and tools are the ultimate insiders,” said Chief Product and Technology Officer Lee Klarich. Over at Koi, CEO Amit Assaraf described traditional tools as “blind” in what he called an “agentic-first world.” (Palo Alto Networks)
During the earnings call, Arora pushed back against the prevailing sentiment. “I’m still confused why the market is treating AI as a threat to cybersecurity,” he told listeners. He assured investors that the company was rapidly working to sync up go-to-market strategies and incentives between CyberArk and Chronosphere. (Channel Dive)
Cyber stocks saw a split session. CrowdStrike edged up roughly 0.6%, but Zscaler slipped 1.3%. Fortinet and Cisco barely budged.
Subscription and support growth land next on the watchlist for traders, along with the response from bigger customers to that pitch about consolidating vendors. Eyes stay on annual recurring revenue—a key yardstick for locked-in subscriptions. Also in focus: remaining performance obligations, which serve as a stand-in for revenue already booked for the future.
Still, execution risk looms large. Integration often takes longer than expected, and those deal costs, plus expenses tied to sales and marketing, have a way of gnawing at earnings—even when demand doesn’t falter.
Palo Alto is ramping up its focus on managed services, rolling out Unit 42 Managed XSIAM 2.0 and tying it to a breach-response guarantee. “Security is measured in outcomes, not alerts,” President Karim Temsamani said. The company plans to detail the launch, along with new threat data, during its “Symphony 2026” virtual event on Feb. 25. (Palo Alto Networks)
