NEW YORK, June 3, 2026, 07:16 (EDT)
- Palo Alto Networks was down in premarket after it boosted its full-year revenue and profit outlooks.
- The company reported a 31% jump in fiscal third-quarter revenue to $3.0 billion, with AI-security demand and acquisitions getting credit for the rise.
- Nasdaq’s main session hadn’t started yet. Regular trading goes from 9:30 a.m. to 4:00 p.m. Eastern time.
Palo Alto Networks shares slid in premarket trading Wednesday. The cybersecurity firm had raised its annual guidance and reported revenue above forecasts, helped by demand for its AI-related security products.
The stock ended Tuesday at $297.18, down 1.1% in regular hours. MarketScreener showed shares at $290.88 before the bell at 7:14 a.m. EDT. Nasdaq hadn’t opened its regular session yet—normal trading goes from 9:30 a.m. to 4:00 p.m. Eastern, and premarket runs from 4:00 a.m. to 9:30 a.m. MarketScreener
Software shares are being re-rated as investors debate if AI ends up driving up software spending or if it just takes a bigger cut out of budgets, with some companies needing to spend more on defense. Reuters said Wednesday that software stocks bounced off an April low. Investors are focusing on names seen as good at using AI, like Palo Alto, Datadog, Synopsys, Oracle and Microsoft.
Palo Alto reported revenue climbed 31% in its fiscal third quarter to $3.0 billion. The company said Next-Generation Security ARR, which tracks annual recurring revenue for cloud and AI security and other new products, was up 60% to $8.1 billion. RPO, or contracted sales still to be recognized as revenue, increased 36% from a year ago to $18.4 billion.
Palo Alto Networks raised its fiscal 2026 revenue outlook to between $11.415 billion and $11.425 billion, while seeing adjusted earnings at $3.77 to $3.79 a share. For the July quarter, the company expects revenue of $3.345 billion to $3.355 billion, with adjusted EPS in a range of 96 to 98 cents.
Chief Executive Nikesh Arora described the quarter as “standout,” saying customers are coming to Palo Alto to “secure their AI deployments at scale.” Finance chief Dipak Golechha said Palo Alto is “ahead of our M&A integration plans” after recent deals. PR Newswire
Palo Alto’s headline results got a boost from acquisitions. The company said CyberArk and Chronosphere brought in $388 million of revenue for the quarter, $1.6 billion in Next-Generation Security ARR, and $1.8 billion in remaining performance obligation. That padded growth, though it means more pressure on integration.
Wall Street’s initial take was mostly positive. MarketScreener flagged several price-target hikes ahead of the open: Wedbush at $340, Needham at $350, Truist at $375, and JPMorgan at $326. But the consensus table on the site still listed an average target of $236.88, under where shares finished Tuesday.
CrowdStrike is up next, with the cybersecurity company set to report after the bell Wednesday. Portfolio managers flagged Datadog and Palo Alto as possible winners if AI keeps driving up security demand, Reuters reported. The read-across for software stocks is direct. Wall Street Journal
Daniel Morgan, portfolio manager at Synovus Trust, told Reuters that AI is “remapping the industry rather than destroying it.” Cantor software equity research managing director Thomas Blakey said recent results show “software companies will be beneficiaries of AI.” Reuters
Palo Alto’s quarter isn’t straightforward. The company posted a GAAP net loss of $177 million, or 22 cents a share, for the period. Adjusted earnings came in ahead of its target, but those non-GAAP numbers leave out stock-based comp and acquisition costs. In its outlook, Palo Alto called out possible headwinds around deals, rivals, AI offerings, sales cycles and worldwide market conditions. PR Newswire
AI-security stocks went into Wednesday trading after a strong run, with investors deciding if the early slide was just profit-taking or a sign the story was priced in. Bulls got some new numbers to work with. The stock didn’t follow the script.
