New York, Feb 18, 2026, 12:06 ET — Regular session
Palo Alto Networks (PANW.O) stock dropped 5.7% to $154.22 by midday Wednesday. (MarketScreener)
Investors aren’t hesitating to ditch software names when expansion drags a hefty price tag along. Cybersecurity demand remains strong, yet Wall Street keeps zeroing in on the mounting costs of piecing platforms together.
Palo Alto lowered its full-year adjusted profit outlook as acquisition-related integration costs mount, despite increasing emphasis on AI-centric security. Morningstar’s Malik Ahmed Khan pointed out the lower profitability seemed tied to “the inclusion of acquisitions,” while Truist Securities indicated plans to “lean in” on this period of weakness. (Reuters)
Fiscal Q2 revenue climbed 15% to $2.594 billion, according to a regulatory filing, with non-GAAP earnings landing at $1.03 a share. For fiscal 2026, the company projected revenue between $11.28 billion and $11.31 billion, and non-GAAP earnings guidance came in at $3.65 to $3.70 per share. CEO Nikesh Arora pointed to an uptick in “platformizations” — that is, customers folding more security tools together — as they update systems for AI. (SEC)
Palo Alto dropped its full-year adjusted profit target to a range of $3.65 to $3.70 per share, down from $3.80 to $3.90. The company did, however, raise its revenue outlook, now expecting $11.28 billion to $11.31 billion—up from the $10.50 billion to $10.54 billion it previously projected, citing a boost from acquisitions. Acquisition-related expenses jumped to $24 million for the quarter, compared with $10 million last year. Palo Alto pointed to roughly $2.3 billion in cash spending on the CyberArk acquisition in the fiscal third quarter, after shelling out $2.6 billion on Chronosphere in the prior quarter. (Reuters)
The company is moving forward with plans to acquire Koi, calling the move a step toward locking down the “agentic endpoint”—those laptops, servers, and other devices now run by AI agents instead of just humans. “AI agents and tools are the ultimate insiders,” Chief Product Officer Lee Klarich said. Koi CEO Amit Assaraf added that their technology is designed to keep AI-driven actions within established boundaries. (Palo Alto Networks)
Non-GAAP, or adjusted, profit excludes things like stock-based compensation and charges tied to acquisitions—investors lean on it to spot operating trends between companies. Palo Alto wants to make that case, even as it squares off against CrowdStrike and Fortinet, two rivals pitching their own expanded platforms.
There’s a risk here: integration could drag out, eat up more cash, or see customers shying away from bundles as budgets get squeezed. Should any of that play out, those higher revenues from acquisitions might not show up in the margins traders are counting on.
Palo Alto’s integration efforts aside, attention shifts to the Fed’s January meeting minutes, expected at 2 p.m. ET Wednesday. Then comes Friday’s BEA Personal Income and Outlays report at 8:30 a.m. ET, featuring the PCE price index—the inflation measure the Fed watches most closely. (Reuters)
