Palo Alto Networks Tops Profit Outlook on AI Security Demand

The cybersecurity firm Palo Alto Networks Inc. issued a profit outlook for the year that exceeded Wall Street’s expectations, fueled by corporate demand for stronger defenses against advancing artificial intelligence systems.

The cybersecurity company sees adjusted profit of $4.16 to $4.19 a share, it said in a statement Tuesday. The figure is above Wall Street’s average estimate of $4.11. Next-generation security annual recurring revenue also came in higher than expected.

Shares were down 2% in post-market trading in New York, reversing earlier gains of as much as 6%. Shares in Palo Alto Networks were up 97% this year through Tuesday’s close, exceeding the S&P 500 Index’s 11% gain over the same period.

Cyber stocks have rallied in recent months as concern about AI-powered attacks and breaches has intensified. Last week, CrowdStrike Holdings Inc.’s third-quarter outlook surpassed analysts’ expectations, while Okta Inc. raised its annual revenue outlook for a second time and posted its highest backlog on record.

“The latest advancements in AI are elevating cybersecurity to the top of the CIO priority list, and will serve as durable tailwinds,” Chief Executive Officer Nikesh Arora said.

The Santa Clara, California-based company also posted a first-quarter sales outlook above expectations as fourth-quarter momentum continues. The company expects revenue between $3.3 billion to $3.31 billion versus analysts’ expected $3.21 billion.