Is It Time to Buy Palo Alto Networks Stock on the Dip?

By Geoffrey Seiler – Feb 22, 2026 at 4:45PM ESTKey PointsPalo Alto saw solid growth in its fiscal Q2.However, recent acquisitions will weigh on EPS in the near term. The stock is now more reasonably valued after its sell-off. These 10 Stocks Could Mint the Next Wave of Millionaires ›NASDAQ: PANWPalo Alto NetworksMarket Cap$104BToday's Changeangle-down(-1.52%) $2.29Current Price$148.70Price as of February 20, 2026 at 4:00 PM ETThe stock is trading down about 25% over the past year.It's been a tough past year for the stock of Palo Alto Networks (PANW 1.52%), with the stock down more than 25% as of this writing. Meanwhile, the stock sank further following the announcement last week of its fiscal 2026 second-quarter (Q2) earnings results. Let's delve into the cybersecurity company's latest report and prospects to see if the stock's recent weakness is a buying opportunity. Image source: Getty Images. On an acquisition spree As Palo Alto has embarked on its platformization strategy (selling its solutions as one of three cybersecurity platforms instead of as point solutions), the company has become aggressive on the acquisition front to add new cybersecurity solutions. In January, it closed its acquisition of real-time data monitoring company Chronosphere, while earlier this month, it completed its acquisition of privileged access company CyberArk. Meanwhile, along with its earnings report, it also announced that it will acquire Koi, which provides agentic artificial intelligence (AI) enterprise endpoint security solutions. While these deals strengthen Palo Alto's positioning in the cybersecurity space and expand on its platformization strategy, they will also weigh on its earnings per share (EPS) in the near term. This is chiefly due to the stock component of the large CyberArk deal.

For Palo Alto's fiscal 2026 Q2, ended Jan. 31, revenue jumped 15% year over year to $2.59 billion, which was at the high end of its previous forecast for revenue of between $2.57 billion and $2.59 billion. Service revenue increased by 13% to $2.08 billion, with subscription revenue climbing by 14% and support revenue up 12%. Product revenue climbed by 22% to $514 million, led by growth in software firewalls. Next-generation security once again powered Palo Alto's growth, with next-generation security annual recurring revenue (ARR) surging by 33%, or 28% excluding acquisitions, to $6.33 billion. Its largest next-generation security solution is SASE (secure access service edge), which saw its annual recurring revenue (ARR) soar about 40% to more than $1.5 billion. Adjusted earnings per share (EPS) surged by 27% year over year to $1.03, which was ahead of its guidance of $0.93 to $0.95. Looking ahead, Palo Alto updated its full-year guidance, taking its revenue up and EPS down, given its recent acquisitions. Below is a table of the company's fiscal Q3 and full-year forecast. Metric Fiscal 2026 Q3 Forecast Prior Fiscal 2026FY Forecast (from Aug) Prior Fiscal 2026 FY Forecast (from Nov) Current Fiscal 2026 FY Forecast Revenue $2.941 billion to $2.945 billion $10.475 billion to $10.525 billion $10.5 billion to $10.54 billion $11.28 billion to $11.31 billion Revenue growth 28% to 29% 14% 14% 22% to 23% NGS ARR $7.94 billion to $7.96 billion $7 billionto $7.1 billion $7 billionto $7.1 billion $8.52 billionto $8.62 billion NGS ARR growth 56% 26% to 27% 26% to 27% 53% to 54% Adjusted EPS $0.78 to $0.80 $3.75 to $3.85 $3.80 to $3.90 $3.65 to $3.70 EPS growth -3% to 0% 12% to 15% 14% to 17% 9% to 11% Data source: Palo Alto Networks. FY = full year. ARR = Annualized recurring revenue. NGS = Next-Gen Security. Is the stock a buy? The drop in stock price has taken Palo Alto to a much more attractive valuation than it has traded at in the past, with a forward price-to-sales ratio (P/S) of 9 times fiscal 2027 estimates and a forward price-to-earnings ratio (P/E) of 33 times 2027 estimates. While its recent acquisitions will initially cause some EPS pressure, these look like smart moves that will help with its platformization approach over the long term. As such, I think investors can look to accumulate the stock at current levels on this dip.Read NextFeb 22, 2026 •By Anthony Di Pizio1 No-Brainer Artificial Intelligence (AI) Stock to Buy With $160 and Hold for the Long TermFeb 20, 2026 •By Eric VolkmanWhy Palo Alto Networks Stock Dipped TodayFeb 19, 2026 •By Selena MaranjianIf You'd Invested $100 in Palo Alto Networks (PANW) Stock 5 Years Ago, Here's How Much You'd Have Today (Hint: You'd Have More Than Doubled Your Dollars)Feb 19, 2026 •By Danny Vena, CPAWhy Palo Alto Networks Stock Slumped This WeekFeb 18, 2026 •By Keith NoonanWhy Palo Alto Networks Stock Sank TodayFeb 16, 2026 •By Rick Munarriz3 Stock Updates You'll Want to Watch This WeekAbout the AuthorGeoffrey Seiler is a contributing Motley Fool stock market analyst covering technology, consumer goods, healthcare, energy, and materials stocks. Prior to The Motley Fool, Geoffrey was a senior equity analyst at Raging Capital Management, a $600 million long-short hedge fund. He holds a bachelor’s degree in history from Haverford College.TMFFindProfitStocks MentionedPalo Alto NetworksNASDAQ: PANW$148.70 (1.52%) $2.29*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.