CrowdStrike delivered its best quarterly performance ever, sending cybersecurity stocks higher across the board. The company reported revenue of $1.47 billion and raised its full-year forecast to around $6 billion. Investors are now watching Palo Alto Networks closely as it prepares to release its own fourth-quarter results on Tuesday, September 1, 2026. The market is already pricing in strong performance for Palo Alto, making its results a test of whether the excitement can be sustained.
Palo Alto’s stock has surged over 100% year to date, but its current price of $371.59 is below the consensus target of $362, according to Yahoo Finance. Analysts are still mostly bullish, with 45 buy ratings and only one sell rating, but they have not fully reacted to the recent rally, according to a report from 24/7 Wall St.. CrowdStrike’s performance shows strong demand for AI-driven security solutions, especially as enterprise buyers increase their spending. The company’s results were driven by a growing fear of AI-powered threats, which has led to more aggressive budgeting by IT leaders. CrowdStrike’s stock gained 18.28% in the past month, reflecting investor confidence in its platform.
However, the two companies operate differently, which makes it risky to treat one as a proxy for the other. CrowdStrike focuses on endpoint and workload protection through a single-vendor platform, while Palo Alto offers a broader set of security tools including firewalls, cloud security, identity, and observability. Hardware still accounts for about 10% of Palo Alto’s revenue, which adds a different dimension to its business model. While CrowdStrike’s success is a positive sign for the industry, it doesn’t automatically translate into strong results for Palo Alto. The real overlap lies in how CIOs are approaching their budgets, with both companies seeing similar shifts in demand. CrowdStrike’s report confirmed that AI threats are driving buyers to invest more in cybersecurity solutions. Palo Alto’s Unit 42 has also noted that attackers can now carry out ransomware attacks in just 25 minutes, a significant drop from previous timelines.
CrowdStrike’s performance raises the bar for Palo Alto rather than clearing it, meaning the company must exceed expectations to impress investors. The market has adjusted its expectations for Palo Alto based on the strong earnings from its peer. If Palo Alto meets its own guidance, it may still look modest compared to CrowdStrike’s impressive results.
Palo Alto has set a high bar for itself with its own guidance, projecting revenue of $3.55 billion, or around 32% growth. The company’s next-generation security ARR is a key metric to watch, with a guided increase of 59% to 60% year over year. Earnings guidance includes non-GAAP EPS between 96 and 98 cents, with a range of $19 to $21 billion in revenue.
However, the headline numbers include a large portion from acquisitions, which makes the organic growth look more modest. When stripped of acquisition-related gains, the company’s organic NGS ARR grew by 28%, and current RPO rose 17%. Product-level signals are also encouraging, with next-generation firewall bookings rising nearly 40% and SASE ARR growing by 40%. Prisma Air customer count tripled from around 100 to over 300, and XIM ARR crossed $600 million with a 100% growth rate.
Despite these positive trends, the company faces integration risks due to its acquisition strategy. Stock-based compensation reached 17% of revenue, leading the company to report a GAAP operating loss of $183 million. Management expects the stock-based compensation ratio to normalize over a 12 to 18-month period.
The key number investors will watch is organic NGS ARR, which should remain at or above 28% to show that the platform remains strong. If organic NGS ARR drops into the low twenties, it could signal that the recent rally in cybersecurity stocks is uneven.
Palo Alto trades at a trailing P/E of 333 and a forward P/E of 82, which is unusually low compared to its current price. The consensus target price suggests that analysts have not fully reacted to the recent stock performance.
Options data shows a balanced setup with more puts than calls, indicating a slightly protective sentiment among investors. The market is watching closely to see whether Palo Alto can match or exceed the momentum set by its industry peers. With a history of disappointing results after strong earnings, Palo Alto must prove it can deliver on its own terms. Investors are expecting a beat that goes beyond the guidance, especially with the market already pricing in a modest beat.
The outcome of Tuesday’s report could determine whether Palo Alto continues to lead the cybersecurity sector or falls behind.
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