Palo Alto Networks Shares Fall 14% in Three Months Despite AI Deal Wins
Palo Alto Networks shares have dropped nearly 14% over the past three months as revenue growth slows. However, the company continues to secure large AI-driven security deals and now trades at a discounted valuation, raising questions for investors on whether to hold or sell.
1. Stock Outperforms Market with 2.05% Daily Gain
Palo Alto Networks closed the most recent session with a 2.05% increase, outperforming the broader technology sector’s 1.2% rise. Trading volume reached 7.8 million shares, 15% above its 30-day average, signaling heightened investor interest. Analysts at Evercore raised their short-term revenue forecast by 3%, citing stronger-than-expected demand for next-generation firewall subscriptions. Institutional buying accounted for 62% of total volume, according to trade data, suggesting continued confidence among large holders.
2. 14% Three-Month Decline Prompts Hold-or-Fold Debate
Over the past quarter, the stock has fallen nearly 14%, driven by decelerating annual subscription growth (down to 23% from 29% in the prior period). Despite this slowdown, the company closed five AI-driven security deals totaling $120 million in contract value during the quarter, marking a 40% increase in deal size compared with the previous quarter. At a current forward enterprise value/EBITDA multiple of 18x—versus the peer group average of 22x—the shares trade at a roughly 18% discount, fueling a debate among analysts on whether the pullback represents a buying opportunity or a signal to reduce exposure.