In addition to being a security company, Palo Alto Networks has recently been an acquisition specialist. From July 2025 to February 2026, it acquired Protect AI, CyberArk, Chronosphere, and Koi Security. Although not all acquisitions have been finalized yet, the integration work has begun. Investors seem concerned about the costs, especially now that Palo Alto itself has lowered its annual profit forecast.
The stock fell six percent even before the market opened on Wall Street, Reuters reports. In particular, the acquisition of CyberArk for $25 billion appears to be generating significant costs on top of that amount. As a one-stop shop for security issues, Palo Alto is attempting to fully integrate its offerings, which already cost $2.3 billion in the third fiscal quarter.
In addition, Palo Alto Networks paid $3.35 billion for Chronosphere, $500 million for Protect AI, and recently Koi Security for an estimated $400 million, although the latter amount has not been confirmed.
Revenue up, profit down
Palo Alto lowered its expected adjusted earnings per share for 2026 to $3.65 to $3.70. Previously, the company had expected $3.80 to $3.90. However, the revenue forecast was raised from $10.50-10.54 billion to $11.28-11.31 billion.
Nevertheless, analysts are optimistic about the share price. Morningstar analyst Ahmed Khan argues that, thanks to the acquisitions, the company will eventually be able to provide existing customers with additional solutions to increase revenue. This seems to be becoming increasingly important in the security arena: the move to ‘platformization’ has been made, with rapid expansion into specific components. In addition to endpoint security, which could be strengthened by the Koi acquisition, for example, identity security has proven to be a particularly important battleground between defenders and cyber attackers. The latter group logs in instead of directly exploiting vulnerabilities; that second step often only takes place in order to move laterally. In addition, malicious actors regularly behave like conventional users of legitimate software, a fact that calls for a more comprehensive security solution.
Palo Alto Networks understands this, but is also willing to spend money on it. This is clearly seen as a worrying development on Wall Street, especially as it is now affecting the bottom line. Nevertheless, we believe that large security companies have no choice but to acquire specialists in certain emerging niches in order to improve, in addition to eliminating potential rivals. Customers usually do not want a fragmented, diverse group of security providers, so consolidation can be positive for end users.