Analysts Bullish on PANW as AI-Driven Cybersecurity Demand Accelerates

The price target raise follows PANW’s solid Q1 beat, modest FY26 raise, and a surprise entry into the observability space through its Chronosphere deal.

PANW reported revenue of $2,474 million for the quarter, topping both BTIG’s and Wall Street’s estimates of $2,462 million. The revenue beat was largely driven by better-than-expected product revenue, noted the analysts, with services fractionally above forecasts.

It’s Next-Generation Security Annual Recurring Revenue (NGS ARR) was $5,850 million, up 29.4% year-over-year with $270 million in net additions. The firm noted how these numbers slightly exceeded its prior estimate of $5,840 million and the Street consensus of $5,834 million.

“In addition, PANW raised the midpoint of its FY26 revenue guide by $20MM to $10,520MM / 14.1% y/y, from $10,500MM / 13.9% previously while maintaining its NGS ARR outlook. All in, we thought it was a good quarter with most KPI’s landing about where we thought they would.”

Besides the performance, the biggest surprise of the night for the firm had been PANW’s announcement of a $3.35 billion acquisition of private company Chronosphere. According to the analysts, Chronosphere is a “highly regarded asset” with tangible synergies with PANW’s existing XSIAM product and SOAR capabilities.