New York, February 23, 2026, 11:46 EST — Regular session
- Palo Alto Networks dropped roughly 2.5% with other cybersecurity names also sliding in late morning trade.
- Broader software names slipped as fresh tariff questions and jitters over possible AI shakeups weighed on the sector.
- Attention shifts now to integration costs, with a March 20 deadline looming for CyberArk notes.
Palo Alto Networks (PANW.O) dropped roughly 2.5% to $144.96 by late morning Monday, with shares dipping as low as $144.24. Volume topped 9 million shares. CrowdStrike sank 8.5%, Zscaler lost 8.7%, and Fortinet was off 4.8%.
Selling followed a broader pullback after President Donald Trump rolled out a new 15% global tariff, jolting markets that were only just recovering from last week’s Supreme Court decision. The S&P 500 software and services index dropped nearly 3%, putting its year-to-date loss at almost 23%, according to Reuters. “The market is just experiencing some profit-taking,” Great Hill Capital chairman Thomas Hayes said. Reuters
Palo Alto shares stayed under pressure Monday, following last week’s guidance cut. The company lowered its adjusted profit target for fiscal 2026, citing increased acquisition expenses. Adjusted EPS is now pegged at $3.65 to $3.70, with revenue in the $11.28 billion to $11.31 billion range. Palo Alto also flagged a $2.3 billion cash outlay in the fiscal third quarter related to its CyberArk deal. Reuters
Palo Alto’s fiscal second-quarter revenue climbed 15% to $2.6 billion, the company said in its Feb. 17 earnings release. Next-Generation Security ARR jumped 33%, landing at $6.3 billion. That ARR figure—annualized recurring revenue—reflects the value of active subscription contracts and serves as a key metric for recurring sales. CEO Nikesh Arora pointed to customers eager “to both modernize and normalize their cybersecurity stack,” with AI accelerating the move to wider platforms. SEC
Some investors are eyeing another pressure point for cybersecurity stocks: the notion that AI-driven tools might chip away at services for which vendors bill clients. Anthropic, an AI startup, has started introducing Claude Code Security—a system that sweeps codebases for weaknesses and proposes fixes. Human review still decides what gets patched. According to Anthropic, the offering is designed to “put this power squarely in the hands of defenders” as they face off against AI-powered threats. The Hacker News
Boards are starting to ask if budgets should move away from monitoring and alerts, leaning more toward automated repairs, according to Merritt Baer, chief security officer at Enkrypt AI. “The real shift is from pattern-matching to hypothesis generation,” Baer said in an interview with VentureBeat. Venturebeat
Analyst opinions are split: some see the selloff as excessive, others as a signal that margin pressure could stick around as Palo Alto works through its acquisitions. Morningstar’s Malik Ahmed Khan attributed the lower profitability “mostly” to those recent deals. Truist Securities analysts, for their part, said they’d “lean in on weakness” if the integration story settles down. Reuters
Still, things could shift for the stock if integration costs climb, synergies show up later than planned, or rivals—especially AI players—step up their code security efforts. In a filing from Feb. 19 related to CyberArk’s 0.00% convertible notes maturing in 2030, Palo Alto disclosed that holders can demand a cash buyback by 5:00 p.m. New York time on March 20, with the actual repurchase scheduled for March 24. SEC
