Powell believes Palo Alto could deliver pro forma revenue growth of at least 17% in fiscal 2027, compared with Wall Street’s estimate of 14.6%. He also expects next-generation security annual recurring revenue, or NGS ARR, to grow at least 26%, ahead of the 24.5% consensus.

For investors, the appeal is straightforward: Faster recurring growth could suggest customers are making larger, ongoing commitments to Palo Alto’s products. Powell’s forecasts remain estimates, but they outline where he sees room for positive surprises.

Chronosphere Expands Palo Alto Networks’ AI Security Opportunity

One business attracting attention is Chronosphere, which Powell said has surpassed $500 million in annual recurring revenue.

Chronosphere operates in observability, a technical term with a practical purpose. It helps companies understand what is happening inside their applications and technology infrastructure. As businesses add cloud services and AI workloads, identifying the source of a slowdown or failure can become increasingly difficult. Think about an online business whose checkout suddenly stops working. Knowing there is a problem is only the beginning. Teams need to identify what caused it and where to focus their response.

Palo Alto completed its acquisition of Chronosphere in January 2026, adding capabilities that provide visibility into complex digital operations. That creates another potential reason for customers to do more business with the company.

Palo Alto Expands Its Identity Security Business

Another part of the story is CyberArk and the identity security platform Palo Alto introduced as Idira. Identity security focuses on who, or what, can access a company’s systems. That includes employees, software, and increasingly AI agents that can perform tasks with limited human involvement. Palo Alto says Idira extends privilege controls across human, machine, and AI identities. The goal is to manage access more precisely as businesses become more automated.

Prisma AIRS Strengthens Palo Alto’s AI Security Strategy

Palo Alto’s Prisma AIRS platform adds another piece to its growth strategy. The company is building broader protection around AI, with capabilities spanning areas such as identity, endpoint security, and observability. Its product portfolio brings together technologies intended to help customers secure AI systems as those systems become more capable and interconnected.

Going forward, investors should watch recurring revenue trends, adoption of newer products, and evidence that customers are buying across the portfolio. Acquisition spending and integration costs also matter, because faster growth does not automatically translate into stronger earnings. BTIG’s outlook offers a clear bullish argument. 

PANW Stock Eyes $400 Resistance

PANW stock maintains a strong technical position despite falling 2.3% to $382.90 on Sept. 29. Shares are trading well above the 50-day moving average at $357.88, keeping the broader uptrend intact. The stock has also recovered from its September pullback and is again approaching the psychologically important $400 level.

Momentum is improving as well. The MACD remains above its signal line, while the positive histogram indicates that bullish momentum has returned. A sustained move above $400 could reinforce the recent uptrend and put the stock into new territory. On the downside, the 50-day moving average around $358 provides an important technical reference. A break below that level would weaken the bullish setup and could bring the September lows back into focus.

Palo Alto Networks Has Multiple AI Security Growth Drivers

As companies use more AI, they will also need to keep their systems and information safe. New AI tools can help businesses work faster, but they also create more things to protect. 

Companies need to know who can access sensitive data, what their AI tools are doing, and when something goes wrong. That creates several opportunities for Palo Alto Networks. One, Chronosphere helps businesses monitor their technology. Two, Idira helps control access to important systems. And three, Prisma AIRS helps protect AI applications. Together, these products give Palo Alto more ways to meet customer needs as AI becomes a bigger part of everyday business.

The bullish case is easy to understand. Businesses want the benefits of AI, and protecting their operations is part of making that investment work. The company has several products that could help them do that. If the company continues to win business and expand customer relationships, it could have a meaningful opportunity for growth in the years ahead.

The company posted adjusted earnings of $1.02 per share, which was above estimates of 98 cents. The company also reported $3.41 billion in revenue, which was higher than the $3.35 billion analysts expected.

PANW Earnings Benefit From AI Cybersecurity Demand

One of the biggest reasons for Palo Alto Networks’ growth is the increasing use of artificial intelligence. AI can help businesses work faster and take on new tasks, but it can also create new security challenges. Hackers can use advanced AI tools to plan and carry out attacks more quickly. In fact, Palo Alto Networks CEO Nikesh Arora said these AI-related risks are creating a long-term opportunity for the company. 

He explained that the effects of AI on cybersecurity will not happen all at once. Instead, he expects the demand for cybersecurity tools to grow over several years.

Agentic AI Could Create New Cybersecurity Threats

One area that has received more attention is called agentic AI. These are AI systems that can do more than simply answer questions. They can plan tasks, make decisions and take actions with less help from people. While this technology can be useful, it could also give hackers new ways to carry out attacks. AI agents may be able to complete multiple steps of an attack without requiring constant human instruction.

Recent security incidents have increased concerns about these risks. The OpenAI-Hugging Face hack, for example, showed how AI-related systems can become targets for cyberattacks. As AI technology becomes more powerful, companies are looking for better tools to protect their systems and information.

Rising AI Security Risks Are Driving Customer Interest

Palo Alto Networks has seen strong interest from its customers. Arora said the company has held more than 2,000 customer briefings since the launch of Anthropic’s Mythos AI model. That is a large increase from the 1,200 briefings the company reported during the previous quarter.

These meetings show that businesses are paying closer attention to the security risks connected to AI. Companies want to understand how new AI technology could affect their networks, data and employees. This growing demand could help Palo Alto Networks continue expanding its cybersecurity business.

Palo Alto Networks Expands AI Security Through Acquisitions

The company is also expanding its AI security business through acquisitions. Palo Alto Networks recently announced that it plans to acquire AI startup Console. The goal is to improve the company’s ability to protect customers from new AI-related threats.

This is part of Palo Alto Networks’ broader acquisition strategy. Over the past year, the company has made several major deals. These include the $25 billion purchase of identity security company CyberArk and the nearly $3.4 billion purchase of Chronosphere.

Arora said Palo Alto Networks can learn from smaller cybersecurity startups that are developing new ideas. He described the startup industry as a place where companies can test different approaches to cybersecurity. If Palo Alto finds a technology it likes, it could choose to acquire the company.

Palo Alto Networks Raises the Bar With Strong 2026 Outlook

Moving forward, Palo Alto Networks gave investors a strong outlook. The company expects to report between $3.30 billion and $3.31 billion in revenue during its first quarter. Analysts had expected $3.22 billion.

For the full fiscal year, Palo Alto expects revenue between $14.10 billion and $14.20 billion. The company also expects adjusted earnings of between $4.16 and $4.19 per share. Both forecasts are higher than analysts’ expectations of $13.79 billion in revenue and $4.11 per share in adjusted earnings.

For Palo Alto Networks, the growth of AI could create a major opportunity. As AI becomes more powerful, companies will need stronger cybersecurity tools to protect their systems. Palo Alto Networks is positioning itself to meet that demand and continue growing in the years ahead.

Then PANW delivered $3.41 billion in fourth-quarter revenue, up 34% year over year, while adjusted earnings per share (EPS) came in at $1.02 against guidance of 96 cents to 98 cents. NGS annual recurring revenue (ARR) reached $9.10 billion against guidance of $8.90 billion to $8.95 billion, while remaining performance obligations (RPO) came in at $21.2 billion versus $20.9 billion to $21.0 billion expected.

Shares rose after the report, then gave back much of the move, leaving a market reaction that says more about the stock than the quarter itself.

The market had already started cutting exposure to expensive software before PANW reported. The earnings then came in strong, yet they failed to reverse that pressure.

PANW Is Getting More Money From Customers It Already Has

Palo Alto Networks added roughly 220 net-new platformizations during the fourth quarter, bringing more customers into a model that replaces several security products with a single platform.

More than 65% of NGS ARR now comes from platformized customers, and those customers produce more than 120% net retention. PANW also ended the year with 223 customers generating more than $5 million in NGS ARR, up 45% year over year, while 78 customers crossed $10 million in NGS ARR, up 50%.

Those numbers give the platform strategy some teeth. How? Simple. PANW isn’t relying on a constant stream of new logos to sustain growth anymore because its largest customers are spending more across the company’s products.

The individual contracts show the size of those accounts, with fourth-quarter wins including a $126 million telecom deal, a $72 million global technology services deal and a $53 million global payments deal.

Network & AI Security revenue grew 17% year over year, Cortex grew 25%, and Idira delivered 21% pro forma growth… which is pivotal, as PANW’s growth is now spreading across the platform instead of sitting within one product that could lose momentum.

AI Gives PANW More Security Spending To Capture

Artificial intelligence is increasing the volume of traffic, data and credentials that enterprises need to protect, which expands the scope of security spending PANW can pursue within existing accounts.

AI traffic through PANW’s software firewalls has increased more than fourfold since June, while agentic traffic through SASE has increased more than ninefold over the last nine months. Prisma AIRS reached roughly $120 million in ARR within one year and now has more than 800 customers.

Cortex XSIAM ARR exceeded $700 million in fiscal 2026 after more than doubling year over year, with roughly 1,000 customers. Observability ARR passed $500 million after more than doubling in two quarters.

CyberArk Software (NASDAQ: CYBR) gives PANW another source of expansion, with more than 200 new CyberArk wins coming from PANW’s existing customer base.

The combination is important for one simple reason — AI can increase the security workload for companies already spending money with PANW, giving the company more opportunities to expand those accounts without rebuilding its customer base from scratch.

PANW generated $4.41 billion in adjusted free cash flow during fiscal 2026, equal to a 38.4% margin, while non-GAAP operating margin reached 29.2%. That is a powerful financial base for a company still investing in AI security and integrating CyberArk

The Forward Numbers Are Where The Argument Gets Harder

PANW expects fiscal 2027 revenue of $14.10 billion to $14.20 billion, representing 23% to 24% growth, while NGS ARR is expected to rise 22% to 23%. Adjusted free cash flow margin is guided to 38%.

The 63% NGS ARR growth reported for Q4 cannot be compared with the 22%-23% outlook without accounting for CyberArk and PANW’s NGS ARR definition, which differs from CyberArk’s prior subscription ARR measure.

There is still a clear change in the numbers investors are being asked to underwrite. The 34% quarterly revenue growth is expected to decline to 23%- 24% for fiscal 2027, while the company expects to keep operating margins near 30% and free cash flow margins near 40%.

Sure, that can support a premium valuation. The problem for shareholders, however, is that Treasury yields have moved toward 5% while software multiples are under pressure across the market.

PANW’s fourth-quarter non-GAAP gross margin also came in at 74.8%, below the 75.8% fiscal-year figure, leaving another number for investors to watch as the company expands its SaaS offerings and integrates CyberArk

The stock, therefore, has less room for a slowdown in growth than the business itself does.

The Chart Gives Us A Line In The Sand

PANW had climbed from roughly $180 in April to around $400 in August, leaving the stock with plenty of valuation risk before the earnings report arrived.

September 1 brought the first serious test, with shares opening at $374.62, reaching $375.92, falling to $357.35 and closing at $362.09 on 9.28 million shares.

The close put PANW below its 20-day moving average near $368.40, while the 50-day average sits around $346.82. I would watch $345 to $350 from here, because a hold would keep the larger advance intact, while a break would put the market’s valuation reset on firmer technical ground. The 200-day average remains near $231, so the long-term trend has plenty of distance beneath it.

I would be more concerned by a heavy-volume break below the 50-day average than by the first reaction to earnings. PANW’s business is still producing 20%-plus forward growth, close to 30% operating margins and more than $4 billion in annual adjusted free cash flow.

And even though I’m holding on to my shares, the stock still has to prove those numbers are enough to support its valuation in a market where money has become more expensive.

Just this week, Boston Scientific (NYSE: BSX), the roughly $72 billion medical device maker, disclosed that it had been hit by a cyberattack that is disrupting its operations. The company said the attack has affected access to information systems and applications, including shipment-related services. Boston Scientific’s disclosure sent its shares lower.

In a filing with the U.S. Securities and Exchange Commission, the company said it is working to restore affected functions and systems but warned that the timeline for a full restoration is not yet known. It’s another reminder that cybersecurity isn’t just an IT issue. A successful cyberattack can quickly become an operational and financial problem for a company, and a potential investment opportunity for cybersecurity companies.

That makes cybersecurity an increasingly important area for investors to watch.

Companies such as CrowdStrike (NASDAQ: CRWD), Palo Alto Networks (NASDAQ: PANW), and Fortinet (NASDAQ: FTNT) are among the major players developing technologies designed to protect businesses and organizations from cyberattacks.

And while investors can buy individual cybersecurity stocks, exchange-traded funds can provide broader exposure to the sector while reducing the risk associated with betting on a single company.

Global X Cybersecurity ETF (BUG)

With an expense ratio of 0.51%, the Global X Cybersecurity ETF (BUG) invests in companies that stand to potentially benefit from the increased adoption of cybersecurity technology. The fund focuses on businesses involved in developing and managing security protocols designed to prevent intrusion and attacks on systems, networks, applications, computers and mobile devices.

iShares Cybersecurity and Tech ETF (IHAK)

With an expense ratio of 0.47%, the iShares Cybersecurity and Tech ETF (IHAK) tracks an index of developed and emerging-market companies involved in cybersecurity and technology.

Its holdings span cybersecurity hardware, software, products and services. Some of its top holdings include Clear Secure, Akamai Technologies, CACI International, SentinelOne, Fortinet and Okta, among its 38 holdings.

For investors who believe cyberattacks will remain a growing threat — and that companies will continue increasing spending to defend against them — cybersecurity ETFs offer one way to gain diversified exposure to the industry.

Cyberattacks Could Keep Cybersecurity Spending High

The Boston Scientific attack is another reminder that cyberattacks are no longer just a problem for governments or large tech companies. They can disrupt the operations of almost any business and potentially hurt its stock, customers and bottom line. 

And the threat isn’t going away. As companies rely more on technology and connected systems, they will need to spend more to protect themselves. That doesn’t mean every cybersecurity stock or ETF will be a winner. But the long-term opportunity is hard to ignore.

We may still be sitting ducks when it comes to cyberattacks. But investors don’t have to be.

As businesses continue to spend billions defending themselves, the companies providing the tools to keep them safe could stand to benefit.

That might sound like an AI infrastructure debate, not a cybersecurity one. But Arora isn’t talking as a bystander. Palo Alto, along with rivals like CrowdStrike (NASDAQ: CRWD) and Okta (NASDAQ: OKTA), is building token-hungry AI agents directly into its security platform: agents that hunt threats, triage alerts, and increasingly act without a human in the loop. Expensive tokens squeeze the margins on that new product layer. At the same time, cheaper tokens mean enterprises can deploy AI agents faster everywhere else in the business — and every one of those agents becomes a new identity that must be authenticated, governed, and protected.

That’s the trade worth watching. As token costs fall and agentic AI spreads through corporate workflows, the “agent economy” needs a security layer built for machine speed. Three cybersecurity companies are positioning to be that layer: Palo Alto Networks (PANW), CrowdStrike (CRWD), and Okta (OKTA). Each is approaching the same problem — securing an enterprise where AI agents outnumber people — from a different angle.

Palo Alto Networks: Building the AI Security Stack From the Inside

Arora isn’t just commenting on token economics from the sidelines. He’s restructuring Palo Alto around AI internally. Part of this means running a twice-weekly leadership meeting nicknamed “AI EIO” where technical leaders present what they’ve shipped with AI since the last session, explicitly designed to create competitive peer pressure. The company has also shifted toward hackathon-only hiring to screen for AI-native talent.

On the product side, Palo Alto launched Prisma AIRS 3.0, extending its cloud security platform with runtime controls and an agentic identity provider built specifically for AI agents. That’s a direct answer to the problem Arora describes: agents that call APIs, access sensitive data, and delegate to other agents at machine speed, often invisibly to legacy security tools.

The bull case here is two-sided. If token costs fall the way Arora predicts, Palo Alto’s own AI-powered cybersecurity features get cheaper to run and easier to scale across its customer base. And falling costs accelerate the enterprise AI adoption that creates demand for Prisma AIRS in the first place. Investors get a company with a credible claim to shaping the trend, not just reacting to it.

CrowdStrike: Making Identity the Control Plane for AI Agents

CrowdStrike’s answer to the agent-identity problem is Continuous Identity for AI Agents, launched in mid-June and built on technology from its roughly $740 million acquisition of SGNL. The pitch is blunt: “authorize once and trust indefinitely is not a security model; it’s a liability,” as CTO Elia Zaitsev put it. Every AI agent gets a cryptographically verifiable identity based on the SPIFFE standard, replacing static API keys, with access granted and revoked in real time based on risk.

The urgency behind this launch is real. CrowdStrike CEO George Kurtz has disclosed incidents at two Fortune 50 companies where an AI agent’s actions passed every identity check yet still produced a damaging outcome — a credential that was valid, access that was authorized, and an action that was catastrophic anyway. That’s the exact failure mode CrowdStrike is selling protection against.

CrowdStrike has also discovered more than 1,800 distinct AI applications running on customer endpoints without security team authorization, a shadow-AI number that should only grow as token costs drop and agent deployment accelerates. For investors, that’s a widening addressable market sitting directly inside CrowdStrike’s existing cybersecurity endpoint footprint — a distribution advantage that’s hard for new entrants to replicate quickly.

Okta: Governing the Fastest-Growing, Least-Governed Identity Type

Okta’s AI in cybersecurity angle is governance rather than endpoint telemetry. Its research found that 88% of organizations have already reported suspected or confirmed AI agent security incidents, yet only 22% treat AI agents as independent, identity-bearing entities that need their own access policies. Okta for AI Agents, which reached general availability on April 30, is built to close that gap by treating agents as first-class identities inside a single directory, with human owners assigned and a kill switch to revoke access from rogue agents.

The company’s open XAA protocol, designed to standardize how agents securely connect to enterprise applications, already has more than 25 early adopters, including Anthropic, Zoom, and Slack. That’s a meaningful signal: Okta is trying to become the neutral identity layer that works across every AI platform an enterprise touches, rather than a walled garden.

The risk-adjusted case for Okta is that it doesn’t need to win the endpoint or the model layer. It just needs enterprises to keep asking “where are my agents, what can they access, and what can they do” — questions that get harder, not easier, as token costs fall and agent count multiplies.

Cybersecurity is Key to the AI Revolution

Arora’s 90% token-cost call is really a bet on how fast enterprise AI adoption accelerates. Palo Alto, CrowdStrike, and Okta are three ways to invest in what happens next: a corporate environment where AI agents proliferate faster than security teams can track them by hand. Palo Alto is rebuilding itself around AI from the inside out. CrowdStrike is turning its endpoint dominance into an identity control plane for agents. Okta is betting that identity governance, not infrastructure, becomes the chokepoint. None of this removes the normal risks of investing in high-multiple software names, but all three cybersecurity companies offer direct exposure to a trend that’s still in its early innings.

That’s why Palo Alto Networks Inc (NASDAQ: PANW)fiscal Q3 2026 earnings left me thinking about something far bigger than firewalls or ransomware

The company reported third-quarter earnings per share of $0.80 on revenue of $2.29 billion, beating Wall Street expectations on both measures. Those numbers were strong enough on their own, yet the figure that kept pulling me back is the NGS ARR. Next-Generation Security ARR climbed 34% to $5.06 billion while Remaining Performance Obligations reached $13.5 billion, up 19%.

In short, customers are committing dollars far faster than Palo Alto is recognizing revenue. And whenever future commitments accelerate ahead of current business activity, I stop asking what customers bought and start asking what they think is coming.

A Different Kind Of Threat

Most cybersecurity spending follows a predictable pattern. A new threat emerges, businesses react, budgets increase, and security vendors benefit. That framework explains much of the industry’s history, but it doesn’t fully account for what I’m seeing in Palo Alto’s results.

Revenue increased 15% year-over-year. Non-GAAP net income climbed to $577.8 million. Operating cash flow reached $578 million. Adjusted free cash flow exceeded $500 million. Gross margins remained among the strongest in enterprise software. In other words, this wasn’t a quarter held together by hype. Growth, profitability, margins, and cash generation were all moving in the right direction.

Yet management continues investing aggressively in products that seem designed for problems most enterprises have barely encountered.

The company completed its acquisition of Portkey, an AI gateway platform. It launched Prisma AIRS 3.0 to secure agentic AI. It introduced Idira to address next-generation identity management. It unveiled a secure browser built for AI-powered work environments. It rolled out Next-Generation Trust Security.

Individually, each announcement looks like another cybersecurity product. But together, they point toward a very specific concern – Oversight

The Next Cybersecurity Crisis May Begin With Permission

The first wave of enterprise AI largely focused on productivity, with most AI systems acting like assistants sitting beside workers. That world is already changing. The next generation of AI won’t just answer questions. It will access systems, retrieve data, execute workflows, communicate with applications, interact with customers, approve routine actions, and increasingly operate with a degree of autonomy that traditional software never possessed.

Now imagine what happens when thousands of those systems exist inside a large enterprise.

Who approved an action? Who granted access? Which system made a decision? Which model touched sensitive customer information? Who is accountable when something goes wrong?

Now look at the products Palo Alto keeps building, and a pattern emerges. Portkey focuses on observing and managing AI interactions. Identity products determine what receives access and under what conditions. Prisma AIRS governs AI applications and agent behavior. Secure Browser aims to control how AI-powered work is conducted within an organization.

You don’t build all those products because you’re worried about yesterday’s cybersecurity challenges. You build them because you’re preparing for tomorrow’s.

Forget Revenue. Focus On ARR Instead

This is where the ARR growth becomes so important.

Revenue tells us what customers need today. ARR tells us what customers believe they’ll need tomorrow.

That’s why the 34% growth in Next-Generation Security ARR may be the most revealing figure in the entire report. Customers are making long-term commitments before many of these AI governance problems become widespread.

The market tends to focus on visible threats because visible threats create headlines. A ransomware attack makes headlines. A data breach makes headlines. A phishing campaign makes headlines.

The challenge Palo Alto appears to be preparing for is quieter.

Every AI model, AI agent, machine identity, browser session, workflow automation, cloud application, and connected system adds another layer of decision-making inside an enterprise. The number of actions taking place grows exponentially, while the number of people capable of overseeing them does not.

Historically, companies solved growth problems by hiring managers. Every additional layer of scale required additional layers of oversight.

The AI era may be creating a similar problem, except this time the workforce isn’t growing. The number of digital actors operating inside organizations is.

No wonder investors remain enthusiastic about Palo Alto despite the stock’s massive run over the past three months. 

After bottoming near $145 in March, shares have more than doubled and now trade around $297, comfortably above the 20-day, 50-day, and 200-day moving averages, a sign that both short-term momentum and long-term trend remain firmly aligned. 

Even after earnings, buyers showed little interest in locking in long-term profits. Volume surged to more than 20 million shares as the stock pushed to fresh highs near $300, suggesting institutions were still accumulating rather than distributing shares. 

Momentum indicators may look stretched after such a sharp move, which explains some hesitation around the psychologically important $300 level. Yet the chart tells a simple story: investors continue treating Palo Alto as a premium AI and cybersecurity name, even as expectations grow increasingly demanding.

A Cybersecurity Company In Transition

Investors often describe Palo Alto as one of the highest-quality cybersecurity businesses, and the financial results support that view. What interests me is what management appears to be building toward.

The acquisitions, product launches, and customer commitments all suggest a future where the challenge is no longer stopping unauthorized access, but maintaining visibility and control after access has already been granted.

That’s a very different problem.

And if I’m right, the next cybersecurity crisis won’t begin with a hacker breaking into a system.

It will begin when organizations discover they have given thousands of AI systems the authority to make decisions, yet lack the oversight required to understand those decisions at scale.

Revenue came in at $765 million. That was up 11% year-over-year, with subscription revenue — which accounts for 98% of the total — matching that growth rate.

• Remaining performance obligations rose 16% to $4.72 billion, a forward indicator suggesting the pipeline is strengthening.
• The dollar-based net retention rate ticked up one point to 107%, a modest but meaningful sign that existing customers are spending more.
• Free cash flow margin hit 35.5%, comfortably above management’s full-year guidance range of 27–28%.

The headline, though, is Okta’s longer-term ambition: a self-calculated $80 billion total addressable market. With FY27 revenue guided at roughly $3.2 billion, the company is capturing only about four cents of every dollar in its stated opportunity, which is either a compelling growth runway or an aspirational target that deserves scrutiny.

The $80B TAM: Opportunity or Aspiration?

Okta breaks its $80 billion TAM across three broad buckets: workforce identity and identity governance, privileged access management, and customer identity. The workforce and governance piece is modeled off U.S. Bureau of Labor Statistics data on businesses with 250-plus employees, then doubled to account for international markets — implying a $42 billion opportunity there alone. Customer identity adds another $30 billion, derived from assumptions about global internet users and per-user pricing.

The math is internally consistent. However, like most vendor-generated TAM calculations, it assumes near-total market penetration across every product line Okta currently offers or has announced. The question is how quickly Okta can expand its share of the identity security budgets it is already competing for — particularly as AI-driven threats are rapidly reshaping what “identity security” even means.

To Okta’s credit, the company is leaning into that shift. New products like Okta for AI Agents and Auth0 for AI Agents address the emerging challenge of non-human identities — machine accounts, service tokens, and autonomous AI systems — which represent a rapidly expanding attack surface. If enterprises standardize on a single identity platform as agentic AI proliferates, the TAM argument becomes more defensible.

Competition: Microsoft Is the Stated Rival, But Watch CrowdStrike and Palo Alto

Okta’s investor presentation dedicates considerable real estate to why it is “the superior choice vs. Microsoft,” citing Gartner rankings, MFA adoption data, and integration depth. The comparison is understandable — Microsoft’s Entra ID is the primary incumbent in enterprise identity, and displacement deals represent a meaningful portion of Okta’s pipeline.

But the more interesting competitive threat may be coming from a different direction entirely. CrowdStrike (NASDAQ: CRWD) and Palo Alto Networks (NASDAQ: PANW) have both expanded aggressively into identity security as part of broader platform consolidation strategies. CrowdStrike’s Falcon Identity Protection and Palo Alto’s Prisma Access offer identity capabilities bundled within security platforms that enterprises are already paying for — removing a procurement hurdle that Okta, as a standalone identity vendor, cannot easily replicate.

The platform bundling risk is real. CISOs under budget pressure are increasingly receptive to “good enough” identity features packaged within a broader security contract rather than a best-of-breed point solution. Okta’s counter-argument — that identity is too critical to delegate to a secondary capability within a broader platform — is reasonable, but it requires enterprise buyers to agree. As Palo Alto and CrowdStrike continue to invest in their identity modules, the “best-of-breed vs. platform” debate will intensify.

Technical Analysis: Digesting the Post-Earnings Spike

From a technical standpoint, OKTA’s move from roughly $113 to $139 on earnings is striking but may need time to consolidate. The stock had been tracking along a declining 50-day moving average (now at $80.70) for much of the past year before breaking sharply higher, and volume on the move — nearly 9.8 million shares — was elevated but not extreme for a post-earnings gap of this magnitude.

A pullback toward the $120–$125 range in the near term would not be surprising, and could represent a more constructive entry point for investors who missed the initial move. MACD momentum is sharply positive, which favors bulls in the intermediate term, but post-earnings gaps of 10%-plus in software stocks frequently retrace at least partially before establishing a new base.

Why the Bulls May Believe

The bull case for Okta is not simply about this quarter — it is about a maturation story finally gaining traction. Non-GAAP operating margin expanded from 14% in FY24 to 26% in FY26, and management is guiding for 25–26% in FY27 even while investing in new products. Free cash flow for FY27 is projected at $855–$885 million, implying a free cash flow yield that begins to look attractive relative to growth-stage software peers.

Perhaps most telling: customers spending more than $100,000 annually grew 6% year-over-year to 5,180, and the cRPO growth of 12% suggests that larger deals are being signed with longer durations. If Okta can sustain revenue growth in the 10–12% range while continuing to expand margins and free cash flow, the earnings power at scale starts to make the current valuation more defensible — and the $80 billion TAM starts to look less like a slide deck number and more like a genuine long-term target.

Can Okta Defend Its Identity Security Lead Against Cyber Rivals?

Okta enters the second half of FY27 with genuine momentum: accelerating RPO growth, expanding margins, and a product portfolio increasingly aligned with where enterprise security is heading. The identity security market is real, large, and growing — and Okta remains the most credible independent platform in the space.

The risks, however, deserve equal attention. CrowdStrike and Palo Alto are not standing still, and platform bundling strategies could compress Okta’s addressable market more quickly than the $80 billion TAM suggests. For investors, the question is whether Okta’s focus and depth in identity security outweigh the scale advantages of its larger rivals — a debate that will likely define the stock’s trajectory over the next several years.

Right now, several insider buying stocks are emerging after recent pullbacks, offering investors potential entry points backed by those who know the business best.

Here are three names to watch closely.

Palo Alto Networks Gets a CEO Vote of Confidence

After a bad start to the year, Palo Alto Networks (NASDAQ: PANW) just saw a massive vote of confidence from CEO Nikesh Arora. On March 27, according to US SEC filings, he bought 68,085 shares at prices ranging from $146.46 to $147.48.

Supporting that purchase is the substantial demand for AI-driven cybersecurity. And according to analysts at Macquarie, the speed and scale of AI-driven attacks will drive even greater demand, which should boost cyber stocks such as PANW. 

Wells Fargo also initiated an overweight rating on PANW with a $200 price target. “We view recent stock dislocation as a favorable entry point for exposure to nearly every major secular trend in cybersecurity,” analyst Michael Turrin said, as quoted by Seeking Alpha. “Although M&A creates [near-term] risk, we ultimately see [long-term] reward of path [toward] 10% share in a $300B+ market.”

PANW also boosted its share buyback program, approving an additional $1 billion buyback. That adds to the previous $4.1 billion initiated several years ago. 

SoFi Technologies Attracts Insider Buying After Dip

Insiders are also buying SoFi Technologies (NASDAQ: SOFI) after a post-earnings dip. Rob Lavet, general counsel, bought 5,000 shares for about $21.04 each. Eric Schuppenhauer, the head of borrowing, picked up 5,000 shares at $19.93 per share.

That kind of buying makes sense for a couple of reasons. First, as of March 9, SOFI stock is technically oversold at $15.15. 

Second, the stock was recently upgraded by analysts at JPMorgan Chase to overweight. The firm said, “Momentum in the business is undeniable, as SoFi continues to add new members and deposits at a record pace, while other fintechs report deposit outflows or stagnant member growth, and investments in marketing in ‘25 and 1H26 set the stage for continued premium customer acquisition and engagement for the foreseeable future,” as quoted by Seeking Alpha.

Salesforce Insiders Step In as Stock Turns Oversold

Since the start of the year, Salesforce (NYSE: CRM) has been a train wreck, falling from $267.82 to a recent low of $185.03. Oversold, it is attempting to pivot higher after catching double bottom support. It’s also over-extended on RSI, MACD, and Williams’ %R. Even better, insiders are buying the dip. In fact, the company director and CEO of Williams-Sonoma, Laura Alber, just bought 2,571 shares for $451,166 on March 19.

Director David Kirk bought 2,570 shares for about $194.62 a share, marking his first open-market purchase of the year, according to Barron’s. 

Why Insider Buying Stocks Matter for Investors

While insider buying should never be the sole reason to invest in a stock, it can provide valuable insight into how those closest to the company view its prospects. Recent insider activity in Palo Alto Networks, SoFi Technologies, and Salesforce suggests that key decision-makers see opportunity amid recent pullbacks.

Wall Street analysts anticipate that earnings per share will reach 76 cents on revenue of $2.58 billion. In the year-ago quarter, the cybersecurity giant posted EPS of 81 cents on revenue of $2.26 billion, beating out the consensus targets of 78 cents and $2.24 billion, respectively. Overall, Palo Alto tends to deliver impressive results. Since at least February 2021, the only blemish has been a top-line miss for Q4 2023.

It’s not that the market doesn’t recognize PANW stock as a core investment. Over the past five years, the security has gained 151%. But since May 2024, the company’s market value has been largely flat, punctuated by choppy trading in the middle of the range. Obviously, the hope is that the general public realizes the broader importance of Palo Alto.

Yes, it’s completely understandable that frontline tech companies like Nvidia (NASDAQ: NVDA) garner both the praise and the headlines. However, cybersecurity has always kept the lights on within the digital ecosystem. As artificial intelligence becomes more powerful — and thus leveraged for nefarious purposes — defensive systems will likely only rise in relevance, not diminish.

As such, PANW stock is almost a no-brainer buy. If you anticipate that the selloff may be overextended, the contrarian position may be enticing and possibly discounted.

Volatility Skew Reveals the Inside Baseball for PANW Stock

One of the most important first-order (observational) analyses to consider is volatility skew. Volatility skew is a screener that identifies implied volatility (IV) — or a stock’s potential kinetic output — across the strike price spectrum of a given options chain. For the Feb. 20 expiration date, the prioritization among smart money traders is downside insurance.

Most prominently, put IV on the lower strike boundaries rises sharply higher and above its call equivalent. This setup indicates that a key concern among options traders and institutional investors is downside tail risk. By buying far out-the-money puts, these transactions effectively serve as southbound volatility insurance — and entities are willing to pay a pretty premium for the protection.

On the upper boundaries, put IV is also elevated relative to call IV. This structure implies the crafting of a mechanical short position, possibly to protect actual long exposure to PANW stock. However, the bigger point may come from information by omission. Call IV is generally flat from the at-the-money strike all the way to the upper boundaries.

Basically, we’re looking at a situation where there is practically no urgency for upside convexity. It’s not that the smart money doesn’t believe upside is possible. Rather, the setup is saying that the perceived risk of downside is of a far greater magnitude than the reward to the upside.

I’m not one to arrogantly proclaim that the smart money is wrong here. But because of the extended underperformance of PANW stock — where it’s down about 6% in the past six months — I believe a surprise upswing would lead to a greater magnitude movement.

Either way, because the prioritization is for puts, the calls are relatively cheap on a volatility basis. They could also be considered a discount if a legitimate reason exists to buy them.

Establishing the Trading Parameters of Palo Alto Networks Stock

While we now have a general understanding of smart money sentiment from the volatility skew, we’re still at a loss as to how this translates into actual price outcomes. For that, we may turn to the Black-Scholes-derived expected move calculator. Wall Street’s standard mechanism for pricing options projects that for the Feb. 20 expiration date, Palo Alto Networks stock may land between $152.04 and $178.74.

Where does this dispersion come from? Black-Scholes assumes a world where stock market returns are lognormally distributed. Under this framework, the above range represents where PANW stock may symmetrically land one standard deviation away from spot (while accounting for volatility and days to expiration).

Essentially, what the model teaches us is that in 68% of cases, we would expect PANW stock to trade somewhere within the prescribed range in nine days. That’s a reasonable assumption, if only because it would take an extraordinary catalyst to drive a security beyond one standard deviation from spot. Still, we’re left with a rather sizable peak-to-trough range of almost 18%.

At this juncture, we have largely reached the utility of first-order analyses. We know what the smart money may be thinking and how this could translate into an actual dispersion. However, we only really know the pricing of uncertainty — not whether that pricing is “appropriate,” for lack of a better phrase.

In other words, we’re faced with the classic search-and-rescue (SAR) conundrum. Black-Scholes has identified a distress signal somewhere in the Pacific Ocean, and the expected move calculator provides a search radius. Unfortunately, we live in a world of limited resources (and daylight). Therefore, we can’t always dedicate a full-on search for every single shipwrecked survivor incident.

Essentially, we would need the help of a second-order (conditional) analysis to find where the survivor might have drifted to — and that’s where the Markov property comes into view.

Using Science to Narrow Down the Probability Space

Under Markov, the future state of a system depends entirely on the present state. Colloquially, forward probabilities should not be calculated independently but should be assessed in context. Regarding the SAR analogy, different ocean currents — such as choppy waves versus calm waters — can easily influence where a shipwrecked survivor is likely to be found.

Here’s how the Markov property is relevant for PANW stock. In the last five weeks (I’m tightening the parameters of my trading model), Palo Alto printed only one up week, leading to an overall downward slope. There’s nothing special about this 1-4-D sequence, per se. However, this quantitative signal represents a unique ocean current, which should, by logical deduction, lead to a unique drift pattern.

Through enumerative induction and Bayesian-inspired inference, we can estimate the typical drift associated with the 1-4-D sequence. We then juxtapose this inference onto the current spot price to calculate a forward five-week distribution.

Of course, inductive models aren’t perfect because, philosophically, there’s no compelling reason why the future is necessarily compelled by past observations (per David Hume). Still, from an operational perspective, induction is one of the best tools we have.

Assuming that you accept the premise, the forward five-week returns of PANW stock will likely land between $160 and $185, with probability density peaking near $170. This gives us a much narrower target to aim at.

With the market intelligence above, I’m tempted by the 172.50/175 bull call spread expiring Feb. 20. This wager requires a net debit of $115, which is the most that can be lost. Should PANW stock rise through the $175 strike, the maximum profit would be $135, a payout of over 117%. Breakeven lands at $173.65, improving the trade’s probabilistic credibility.

Fundamentally, cybersecurity represents a line item on the corporate expense sheet that cannot be underserved. All it really takes is one bad data breach to nuke a hard-earned reputation — not to mention the loss of customer trust and heightened regulatory scrutiny. Even worse, cybercriminals are becoming increasingly adept at breaching defenses. And for all its benefits, gen AI would expand the scale and scope of critical vulnerabilities.

It’s also fair to point out that Palo Alto Networks isn’t the only name in cybersecurity. With competition heating up, the company finds itself in challenging waters. With broader economic headwinds weighing on sentiment, PANW stock hasn’t been the strongest performer, gaining less than 13% in the past 52 weeks. For context, the S&P 500 gained more than 19% during the same period.

Nevertheless, the rising sophistication of cybercrime cynically necessitates digital security. Therefore, while Palo Alto may not be the most riveting business, it happens to be one of the most important enterprises. For investors, there’s a long-term case to be made. At the same time, options traders may have an enticing opportunity with PANW stock.

Pushing Upstream into the Informational Space

As a rule of thumb, anytime you place a wager in the market — especially in the options arena — you should assume that you’re operating from a disadvantage. No matter how smart you are, so long as you are classified as a retail market participant, you will always be downstream of pretty much everything.

By the time actionable information gets to your screen, the intelligence has already been filtered down through multiple institutional layers. Even expert opinion — which by nature is a downstream construct — has likely been first disseminated to privileged investors. Unless you are an institutional entity, you are always last to know.

To be blunt, when it comes to access, there is really no way to go upstream. However, this doesn’t mean that you’re forever doomed to be trading with one hand tied behind your back. The fact of the matter is, nobody knows what tomorrow will bring. Therefore, any assertions about tomorrow are never neutral.

Of course, Wall Street can’t just throw its hands up in the air and plead ignorance. Subsequently, market makers will use formulations derived from the Black-Scholes model as a first-order approximation of forward risk pricing. It’s from this model that options-related probabilities come from. However, what’s important to keep in mind is that these probabilities are presuppositional.

Essentially, they’re probabilities relative to a normally distributed world that the Black-Scholes model has created. In this paradigm, risk is calculated monotonically; that is, risk rises in proportion to the target price’s distance away from the spot price. To use a football analogy, a 50-yard field goal represents a much more difficult proposition than a 30-yard attempt.

However, in certain game situations, it’s possible that a 30-yard kick may be more difficult than a 50-yarder. For example, a kicker may have extreme difficulty in a massive crosswind and would prefer a longer attempt in a clean environment.

The problem for market makers is that they can’t just price risk in an unorthodox way for some securities and not for others. Fortunately, the retail trader has no such restrictions and is free to price risk however they want.

My hypothesis, ultimately, is that PANW stock options are incorrectly priced — and bullish speculators may potentially take advantage of this dynamic by going upstream the information space.

Exploiting a Pricing Mismatch for PANW Stock

As one of the most relevant players in the broader tech ecosystem, it shouldn’t come as a surprise that PANW stock enjoys an upward bias. Looking at the security from a hierarchical perspective, past historical data going back to January 2019 reveals that a random 10-week position held in PANW would land between $185 and $202 (assuming a spot price of $189.02).

However, we’re not interested in trading Palo Alto stock for its aggregate behavior but rather the statistical response to its current quantitative structure. In the last 10 weeks, PANW printed only three up weeks, leading to an overall downward slope. Typically, investors may consider this setup to be unusually risky as it implies that the bears have control. Still, under this framework, PANW tends to resolve upward over the next 10 weeks.

Specifically, after the 3-7-D (three up, seven down, downward trend) sequence flashes, Palo Alto stock would be expected to land between $193 and $207. Moreover, probability density would likely peak around $200. What’s even more fascinating, probability decay between $200 and $205 would sharply accelerate. As such, it would make sense to cap off debit-based exposure around the $200 mark.

Looking at Black-Scholes-derived options calculators, the chance that PANW stock will reach $200 by the Feb. 20, 2026, monthly expiration date would be 31.42%. However, a hierarchical model isolating for the response to the 3-7-D sequence shows that a landing spot of $200 is contextually realistic. It’s not a moonshot bit of speculation as the Black-Scholes model implies.

Basically, Wall Street prices risk as a function of distance to the current spot price. However, it has not been proven that PANW stock’s behavioral patterns can be best described by a lognormal, parametric calculation. In my best estimation, the 31.42% figure that Wall Street is calculating is overly pessimistic.

As such, I would be a buyer of PANW stock — but only up to a certain point.

Targeting a Sensible Trade for Palo Alto Stock

Given the market intelligence above, the trade that comes off as the most appealing (in my opinion) is the 195/200 bull call spread expiring Feb. 20. This trade requires PANW stock to rise through the second-leg strike ($200) at expiration. If it does, the maximum payout would clock in at 150%. Breakeven sits at $197, adding to the trade’s probabilistic credibility.

To be sure, there are higher-strike spreads that offer much bigger payouts. However, the expected distribution of PANW stock outcomes reveals a sharp drop in probability density beyond the $202 price point. Therefore, cutting off upside exposure at $200 makes plenty of sense.