Palo Alto Networks: A No-Brainer Stock-Split Investment for Long-Term Growth

 

POINT

  • Palo Alto Networks (NASDAQ: PANW) recently completed its second stock split in two years, making its stock more accessible to retail investors.

  • The company is integrating artificial intelligence (AI) into its cybersecurity products to combat AI-driven threats and enhance security operations.

  • Palo Alto is experiencing strong revenue growth driven by its AI-powered security platforms, positioning it as a compelling long-term investment.



DETAILS

Image created using Microsoft Designer

Palo Alto Networks, the world’s largest cybersecurity company, executed a 2-for-1 stock split on December 13, effectively doubling its shares in circulation and halving the price per share. While stock splits do not change a company’s intrinsic value, they make shares more affordable for small investors.

This move reflects Palo Alto's rapid growth and increasing market value. Over the past two years, its stock price has surged due to its industry-leading cybersecurity solutions and strong financial performance.



A Growing AI-Powered Cybersecurity Portfolio

Palo Alto Networks is aggressively integrating AI into its cybersecurity offerings to tackle the increasing threat of AI-driven cyberattacks. The company offers three core security platforms:

  1. Cloud Security

  2. Network Security

  3. Security Operations

Its flagship AI-powered security platform, XSIAM, is revolutionizing incident response by significantly reducing resolution times. One customer cut their average incident resolution time from three days to just 16 minutes while processing ten times more data. As of Q2 FY2025, XSIAM has surpassed $1 billion in bookings, underscoring its growing adoption.

Palo Alto is also addressing security concerns related to AI adoption. Many organizations rely on third-party AI models like OpenAI, exposing sensitive data to new vulnerabilities. To mitigate these risks, Palo Alto launched AI Access Security, a solution designed to secure critical data used in AI applications. This platform has rapidly grown to support 1,800 AI applications, up from 500 six months ago.



Revenue Growth and Platformization Strategy

Palo Alto's financial growth is being driven by its Next-Generation Security (NGS) portfolio, which includes AI-powered solutions like XSIAM. The company is on track to generate $9.1 billion in revenue for FY2025, marking a 14% increase from the previous year.

The platformization strategy is a key factor behind this growth. Traditionally, businesses used multiple cybersecurity vendors, leading to fragmented security stacks. Palo Alto is consolidating security services into its comprehensive platforms, increasing customer retention and driving higher spending per client.

  • In Q2, the number of customers using two Palo Alto platforms increased by 50% year-over-year.

  • The number of customers using all three platforms tripled.

  • Of Palo Alto's top 5,000 customers, 1,150 have adopted a platformized approach, enhancing revenue predictability and reducing customer churn.



OUTLOOK & LONG-TERM INVESTMENT POTENTIAL

Palo Alto’s long-term vision includes tripling its platformed customers to 3,500 by 2030, which could result in $15 billion in annual recurring revenue (ARR) from NGS—three times its recent Q2 result.

Even at that level, Palo Alto will still have a significant growth runway. The global cybersecurity market, currently valued at $193.7 billion, is projected to reach $377.9 billion by 2030, growing at a 14.3% compound annual growth rate (CAGR). This massive market expansion presents an enormous opportunity for Palo Alto to capture additional revenue.



CONCLUSION

Although Palo Alto stock is trading at a premium with a price-to-sales (P/S) ratio of 17.1, it remains cheaper than CrowdStrike (NASDAQ: CRWD), its closest competitor in AI-driven cybersecurity.

With AI-powered solutions fueling rapid revenue growth and a strong customer retention strategy, Palo Alto Networks presents a compelling long-term investment opportunity. Investors with $200 to invest should seriously consider adding Palo Alto stock to their portfolio, as the company is poised for continued growth in the booming cybersecurity sector.



SOURCE

Original Article on The Motley Fool

Comments

Post a Comment

Popular posts from this blog

Rivian Stock Surged – Is Now the Time to Buy?

Image
  📌 Key Points Rivian stock jumped 6.6% following reports of U.S. State Department EV procurement plans. The company is still posting large losses, requiring increased production and cost reductions. Political uncertainties and slowing EV demand pose risks, but long-term growth potential remains with new vehicle platforms.
Read more

3 Tech Defense Stocks That Could Be the Next Palantir

Image
  POINTS Palantir (PLTR) surged 368% over the past 12 months , reflecting strong market demand for companies that integrate advanced technology with defense applications. Three emerging companies— BlackSky, Redwire, and Archer Aviation —have demonstrated significant market validation, with stock gains ranging from 40% to 690% in the past year. These companies possess strong strategic capabilities and solid financial positioning , resembling Palantir’s early fundamentals and making them potential industry leaders. The U.S. Department of Defense (DoD) and global governments are rapidly adopting AI, satellite technology, space infrastructure, and electric aviation in their defense strategies. DETAILS 1. BlackSky Technology (BKSY) - Real-time Space-based Intelligence Provider BlackSky Technology BI Stock performance: +40% over the past 12 months Provides AI-powered real-time satellite image analysis , delivering actionable insights within 90 minutes. Spectra Platform: Uses AI and ma...
Read more

Best AI Stock for 2025: AMD vs. Nvidia – Where to Invest?

Image
  POINT Nvidia (NVDA) : The undisputed leader in the data center market, a key player in AI infrastructure development. AMD (AMD) : Rapidly growing, but its data center revenue is only one-tenth that of Nvidia . Both companies have similar valuations , but Nvidia maintains a higher growth rate . For AI investors, Nvidia is likely the superior choice . DETAILS Nvidia: The Unchallenged Leader in AI Data Centers Image source: nvidia Nvidia dominates the AI data center market and is the biggest beneficiary of the ongoing AI investment boom . ✅ Competitive Edge: CUDA Software Ecosystem : Nvidia's AI GPUs have become the industry standard, thanks to the dominance of CUDA software. High Switching Costs : Even if AMD releases competitive AI GPUs, companies are unlikely to switch from Nvidia’s infrastructure. Revenue Disparity : AMD Q3 2024 Data Center Revenue: $3.5B (YoY +122%) Nvidia Q3 2024 Data Center Revenue: $30.8B (YoY +112%) → Over 10 times that of AMD 📈 Future Performance Outlook...
Read more