Why Palo Alto Networks Stock Plummeted This Week
Key Points
Palo Alto Networks beat Wall Street's sales and earnings targets for fiscal Q4.
The company also issued strong forward guidance for the current fiscal year.
Palo Alto stock has posted big gains this year, and expectations were very high heading into its quarterly report.
- 10 stocks we like better than Palo Alto Networks ›
Palo Alto Networks (NASDAQ: PANW) stock has been hot this year, but it took a step back this week. The company's share price declined 10.3% across the stretch of trading, which saw the S&P 500 and the Nasdaq Composite rise 0.3% and 0.2%, respectively.
After the market closed on Tuesday, Palo Alto published results for the fourth quarter of its 2026 fiscal year -- which ended July 31. The cybersecurity stock sold off after the report, even though the company posted sales and earnings beats and strong forward guidance.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
Palo Alto Networks had strong momentum last quarter
Palo Alto's revenue increased roughly 34% year over year in fiscal Q4 to reach $3.41 billion -- a performance that beat the average Wall Street analyst estimate by $60 million. Meanwhile, non-GAAP (adjusted) earnings per share came in at $1.02 -- improving from $0.95 per share in the prior-year quarter and beating the average analyst estimate by $0.04 per share.
Annualized recurring revenue for the company's next-generation security segment increased 63% year over year to $9.1 billion at the end of the quarter, and remaining performance obligations rose 34% to $21.2 billion. By virtually all measures, it was a strong quarter for the business -- but expectations were very high heading into the report.
What's next for Palo Alto?
For the current fiscal year, Palo Alto is guiding for sales between $14.1 billion and $14.2 billion. The guidance range came in significantly ahead of the average Wall Street analyst estimate, which had called for sales of $13.83 billion prior to the recent business update.
Meanwhile, adjusted earnings per share are projected to be between $4.16 and $4.19 -- topping the average analyst forecast for per-share earnings of $4.11. Along with the fiscal Q4 report, Palo Alto also announced that it had acquired Console -- an agentic artificial intelligence platform for managing and resolving alerts, issues, and requests for enterprises.
Despite this week's pullback, Palo Alto stock is still up roughly 81% year to date. AI-driven demand has become central to the company's valuation story, but elevated expectations also mean that the stock has the potential for downside volatility even when its results and guidance look strong.
Should you buy stock in Palo Alto Networks right now?
Before you buy stock in Palo Alto Networks, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palo Alto Networks wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of September 6, 2026.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
Recommended Articles
