Palo Alto Networks Acquired 3 Companies in the Past Year. Here's Why Its Platformization Strategy Could Pay Off Big.

There's an old saying in business: You can either buy or build.

Each strategy offers pros and cons, but buying what you need can be faster and potentially less costly with the right acquisition and execution.

In the crowded cybersecurity space, Palo Alto Networks (NASDAQ: PANW) is a builder, but it has also been on an aggressive buying spree over the last year.

Today, we'll look at three specific acquisitions and how they'll be integrated into Palo Alto Networks.

Source image: Getty Images.

Why the acquisition strategy could pay off

This isn't a surprise, but Palo Alto Networks' acquisitions over the last year have had an artificial intelligence (AI) flair.

1. Protect AI

Protect AI launched in 2022, and promoted itself as providing the "broadest and most comprehensive AI security solution," designed to offer protection throughout the life cycle of generative AI applications and machine learning models.

It was a private company before Palo Alto Networks acquired it in July 2025, so there wasn't much publicly available financial information about it. However, what can still be valuable in such cases is to listen to what management says about how the buyer expects an acquisition to add value to its operations.

"The promise of AI is immense, but so are the security risks," said Anand Oswal, now Palo Alto's executive vice president of network security, in the July 22 press release announcing the completion of the acquisition. "Our customers are moving quickly to adopt AI and are asking for a partner who can secure their entire AI ecosystem at scale. Protect AI's capabilities are a powerful complement to our innovative Prisma AIRS platform, and scales our ability to provide both depth and breadth in AI security to deliver protection across the entire AI lifecycle."

2. Chronosphere

Chronosphere launched in 2019 as a cloud-native monitoring platform; it's designed to allow companies to detect, understand, and fix issues before they become larger problems.

It was also a private company, and the acquisition was completed in January.

"With this acquisition, Palo Alto Networks is redefining how organizations run at the speed of AI -- by enabling customers to gain deep, real-time visibility into their applications, infrastructure, and AI systems -- while maintaining strict control over data cost and value," Palo Alto said in its Jan. 29 press release.

3. CyberArk

CyberArk offers an identity security platform that manages credentials, authentication, sessions, and privilege controls for humans, AI agents, and machines.

Unlike the two companies mentioned above, CyberArk was publicly traded before Palo Alto Networks closed its acquisition in February.

In 2025, it reported $1.3 billion in revenue and an operating loss of $131.2 million, but did not provide financial guidance for 2026.

Palo Alto Networks will offer CyberArk's Identity Security solutions as a stand-alone platform, but will also integrate CyberArk's capabilities into its own security products.

"The emerging wave of AI agents will require us to secure every identity -- human, machine, and agent," CEO Nikesh Arora said in the company's Feb. 11 press release. "This is why we moved decisively by announcing our intent to acquire CyberArk last July and [I] am excited to have product integration begin."

The big opportunity

Fortune Business Insights forecasts massive growth in the global cybersecurity market, predicting it will climb from a value of roughly $219 billion in 2025 to nearly $700 billion by 2034.

Looking at different valuation metrics, there's a lot for an investor to consider before deciding whether Palo Alto Networks would be a good fit for their portfolio.

A high forward price-to-earnings ratio is normal in this industry, and Palo Alto Networks' 45.2 ratio is no exception. Investors are paying now for the high growth they expect in the future, but that also means there is less of a price cushion for missteps, which can happen when a company undertakes an aggressive acquisition strategy.

These acquisitions could negatively affect the bottom line. Still, if Palo Alto Networks can execute properly on integrating them into its operations, they will enable it to offer more in-depth products, enhancing its edge in the crowded cybersecurity space. In that case, patient investors may be rewarded in the years ahead for recognizing the power of Palo Alto Networks' acquisition strategy.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.