Palo Alto Networks Earnings Disappoint, But Analysts See AI Opportunity

Cybersecurity firm's stock drops after weaker-than-expected guidance, but experts believe long-term AI trends will boost business.

Published on Feb. 20, 2026

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Palo Alto Networks reported strong Q2 2026 results, with revenue and earnings beating estimates. However, the company's stock dropped over 8% in after-hours trading due to weaker-than-expected guidance for the current quarter and full fiscal year. Analysts believe the guidance miss is due to dilution from recent acquisitions, rather than underlying business issues, and see the post-earnings dip as an opportunity to buy the stock.

Why it matters

Palo Alto Networks is a leader in the cybersecurity industry, which is becoming increasingly important as AI adoption expands attack surfaces for organizations. Analysts believe Palo Alto's comprehensive platform approach positions it well to capitalize on growing demand for AI-powered security solutions.

The details

Palo Alto Networks reported Q2 2026 revenue of $2.59 billion, up 15% year-over-year, and EPS of $1.03, beating estimates. However, the company issued weaker-than-expected guidance for Q3 and the full fiscal year, citing dilution from its recent acquisitions of CyberArk and Chronosphere. Palo Alto CEO Nikesh Arora emphasized that AI adoption is expanding attack surfaces for organizations, requiring a comprehensive security platform approach that the company is well-positioned to provide.

  • Palo Alto Networks reported Q2 2026 results on February 17, 2026.

The players

Palo Alto Networks

An American cybersecurity company that provides firewall and other security solutions to enterprises.

Nikesh Arora

The CEO of Palo Alto Networks.

CrowdStrike

A cybersecurity company and a competitor of Palo Alto Networks.

Fortinet

A cybersecurity company and a competitor of Palo Alto Networks.

Cisco Systems

A technology company that also offers cybersecurity solutions, and is a competitor of Palo Alto Networks.

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What they’re saying

“As AI begins interacting autonomously across application infrastructure, fragmented security introduces delay at precisely the wrong moment.”

— Nikesh Arora, CEO, Palo Alto Networks (CNBC)

“In most cases, our security products sit at edges and create new data and logs that didn't exist, from everything that's around them. So, to the extent we are creating proprietary data and security, that is not going to be replaced by an LLM.”

— Nikesh Arora, CEO, Palo Alto Networks (CNBC)

What’s next

Palo Alto Networks' next earnings report is expected in May 2026.

The takeaway

While Palo Alto Networks' recent earnings disappointed, analysts see the post-earnings dip as an opportunity to invest in a cybersecurity leader well-positioned to capitalize on the growing demand for AI-powered security solutions as AI adoption expands attack surfaces for organizations.