Software Stocks Selloff Amid AI Tool Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 23 2026
0mins
Should l Buy PANW?
Source: stocktwits
- Market Sentiment Shift: Investors are pulling out of software stocks amid concerns that AI tools may reduce demand for niche enterprise software, with stocks like Palo Alto Networks and Zscaler dropping over 10% last week, indicating a waning confidence in traditional software solutions.
- Earnings Impact: Palo Alto Networks reported a third-quarter profit that missed expectations and lowered its 2026 profit outlook, leading to a stock price decline that reflects the company's vulnerability in the face of AI competition, potentially affecting its future market performance.
- New Tool Launch Impact: The release of Anthropic's Claude Code Security tool, which uncovered over 500 high-severity vulnerabilities during internal testing, has intensified market fears regarding traditional cybersecurity software, prompting investors to reassess the value of these companies.
- Diverging Analyst Views: Despite the bearish market sentiment, Barclays analysts argue that the selloff in cybersecurity stocks “seems incongruent,” asserting that Anthropic's tool does not directly replace the core offerings of major cybersecurity vendors, indicating a level of confidence in the industry.
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Analyst Views on PANW
Wall Street analysts forecast PANW stock price to rise
34 Analyst Rating
28 Buy
5 Hold
1 Sell
Strong Buy
Current: 150.150
Low
157.00
Averages
232.49
High
265.00
Current: 150.150
Low
157.00
Averages
232.49
High
265.00
About PANW
Palo Alto Networks, Inc. is a global artificial intelligence (AI) cybersecurity company, with a comprehensive portfolio of cybersecurity solutions and platforms across network, cloud, security operations, AI and Identity. Its network security platform includes Secure Access Service Edge (SASE), Next-Generation Firewalls, Cloud Delivered Security Services (CDSS), Prisma AIRS, and Strata Cloud Manager (SCM). It delivers security operations capabilities that unifies standalone Security Information and Event Management (SIEM) tools, endpoint security, security automation, cloud detection and response (CDR), as well as attack surface management (ASM) capabilities on its Cortex platform. It delivers comprehensive security across the cloud application development lifecycle through Cortex Cloud. Its Unit 42 brings together expertise across threat research, incident response, and security consulting to deliver intelligence-driven, response-ready outcomes that help customers reduce cyber risk.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Oil Price Surge: International oil prices surged for the second consecutive day, with Brent crude surpassing $85 per barrel due to Iran's blockade of the Strait of Hormuz and threats against tankers, intensifying market expectations of regional supply disruptions that may affect global energy price stability.
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- Palo Alto Networks Coverage Initiation: Wells Fargo initiated coverage on Palo Alto Networks with a buy-equivalent rating and a $200 price target, noting its advantages in large enterprise customer base and willingness to invest ahead of adoption curves, reflecting optimistic market sentiment towards the cybersecurity sector.
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- Market Outlook: Analyst Michael Turrin highlights that the cybersecurity market exceeds $300 billion, with Palo Alto Networks poised to capture a 10% market share in the future; despite short-term risks from M&A, the long-term rewards are compelling.
- Competitive Advantages: Palo Alto Networks boasts a large enterprise customer base and distribution advantages, with its unmatched platform breadth allowing for ongoing investments through organic growth and acquisitions, thereby strengthening its market position.
- Acquisition Case Study: The recent acquisition of CyberArk is viewed as a strategic move to fill a gap in Palo Alto's security portfolio, providing immediate value while enhancing identity management integration, ultimately improving the effectiveness of the overall security stack.
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Investment Opportunities: Analysts suggest that despite current valuation concerns, Palo Alto and Zscaler are well-positioned for long-term growth, with forecasts indicating substantial upside potential for investors.
Market Sentiment: Recent trading volumes and price actions indicate a shift towards bullish sentiment, suggesting that the market may have reached a bottom, providing a favorable environment for investment.
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See More
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See More
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- Market Decline: The Dow Jones fell over 850 points on Tuesday as investors sold off amid concerns that the U.S.-Iran conflict will be prolonged, indicating a heightened sensitivity to geopolitical risks that could undermine investor confidence in the short term.
- Oil Price Surge: International oil prices surged for the second consecutive day, with Brent crude surpassing $85 per barrel due to Iran's blockade of the Strait of Hormuz and threats against tankers, intensifying market expectations of regional supply disruptions that may affect global energy price stability.
- CrowdStrike Earnings Outlook: CrowdStrike's stock rose over 1% ahead of its earnings report, with analysts suggesting it must demonstrate strong results to counter claims that artificial intelligence poses a threat to its business, highlighting ongoing market interest in cybersecurity demand.
- Palo Alto Networks Coverage Initiation: Wells Fargo initiated coverage on Palo Alto Networks with a buy-equivalent rating and a $200 price target, noting its advantages in large enterprise customer base and willingness to invest ahead of adoption curves, reflecting optimistic market sentiment towards the cybersecurity sector.
See More
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- Rating and Price Target: Wells Fargo initiates coverage on Palo Alto Networks (PANW) with an Overweight rating and a $200 price target, indicating optimism about the company's potential benefits from consolidation in the cybersecurity sector, which is expected to drive stock price appreciation.
- Market Outlook: Analyst Michael Turrin highlights that the cybersecurity market exceeds $300 billion, with Palo Alto Networks poised to capture a 10% market share in the future; despite short-term risks from M&A, the long-term rewards are compelling.
- Competitive Advantages: Palo Alto Networks boasts a large enterprise customer base and distribution advantages, with its unmatched platform breadth allowing for ongoing investments through organic growth and acquisitions, thereby strengthening its market position.
- Acquisition Case Study: The recent acquisition of CyberArk is viewed as a strategic move to fill a gap in Palo Alto's security portfolio, providing immediate value while enhancing identity management integration, ultimately improving the effectiveness of the overall security stack.
See More
Latest Wall Street Ratings Analysis
- Ormat Technologies Rating: RBC initiates coverage on Ormat Technologies with an Outperform rating and a $130 price target, indicating the geothermal company is well-positioned for market share gains, highlighting its potential in the renewable energy sector.
- Palantir Data Platform: Rosenblatt reiterates Palantir as a Buy, raising the price target from $150 to $200, emphasizing the platform's value amid the Middle East conflict, which suggests strong demand in the data analytics market.
- Varonis Data Security: Wells Fargo rates Varonis as Overweight, asserting that its best-in-class technology is set to capture increasing enterprise demand for data security as AI adoption and SaaS transitions accelerate, positioning the company for significant growth.
- Netflix Future Outlook: Oppenheimer maintains Netflix as Outperform with a $125 target, noting that the absence of the WBD acquisition makes its outlook more predictable, and the resumption of share repurchases will enhance its competitive position in the market.
See More
Wells Fargo Initiates Overweight Rating on Palo Alto Networks with $200 Target
- Positive Market Trends: Wells Fargo has initiated an overweight rating on Palo Alto Networks with a $200 price target, indicating a 33% upside, reflecting confidence in long-term trends in the cybersecurity sector.
- Stock Price Adjustment Opportunity: Despite an 18% decline in Palo Alto Networks' stock this year, analysts view the current price dislocation as a favorable entry point for investors to engage with major trends in cybersecurity.
- Core Business Growth: Network security constitutes 60% to 65% of the company's revenue, with expectations for sustained above-market growth at a low-teens rate through 2030, indicating strong market demand and competitive positioning.
- Clear Technological Advantages: Palo Alto Networks' rapid adaptation in the network security landscape has secured it the #2 position in the secure access service edge market, with analysts believing it is well-positioned to capitalize on the hybrid-cloud value proposition, potentially capturing greater market share.
See More
Two Troubling Investments: The Case for Why Palo Alto and Zscaler Are Great Bargains
Market Trends: Cybersecurity stocks like Palo Alto Networks and Zscaler have seen significant declines, with potential for rebound as the industry is expected to grow at a compound annual growth rate of 10-15% over the next decade.
Investment Opportunities: Analysts suggest that despite current valuation concerns, Palo Alto and Zscaler are well-positioned for long-term growth, with forecasts indicating substantial upside potential for investors.
Market Sentiment: Recent trading volumes and price actions indicate a shift towards bullish sentiment, suggesting that the market may have reached a bottom, providing a favorable environment for investment.
Analyst Recommendations: Analysts are advising clients to consider buying these stocks now, as they believe these companies represent some of the best investment opportunities in the cybersecurity sector.
See More
Iran Faces Severe Internet Blackout Amid Conflict
- Current Internet Blackout: Iran is experiencing a near-total internet blackout lasting over 48 hours amid ongoing conflict with the U.S. and Israel, with connectivity at just 1% of normal levels, severely impacting over 90 million citizens and highlighting the government's strict control over information flow.
- Historical Context: NetBlocks attributes this blackout to a 'regime-imposed' nationwide shutdown, reminiscent of a similar incident in January that lasted weeks and obscured severe human rights violations, indicating the government's tendency to employ such tactics during public protests to maintain control.
- Cyber Attack Threats: U.S. and Israeli cyberattacks have targeted Iranian internet infrastructure, with multiple government-aligned news websites hacked, and even the popular religious calendar app BadeSaba, with over 5 million downloads, compromised, indicating a psychological warfare strategy against the populace.
- Potential Cyber Retaliation: As Iran retaliates with strikes against U.S. and allied targets, analysts warn that Iranian-aligned groups may initiate cyber attacks, with CrowdStrike's head noting observed activities consistent with Iranian threat actors, suggesting that more aggressive cyber operations may be forthcoming.
See More
