Why Is Palo Alto Networks, Inc. (NASDAQ: PANW) Stock Up 107% This Year?

What happened

Shares of Palo Alto Networks, Inc. (NASDAQ: PANW) rose 106.6% from the December 31, 2025 close through October 23, 2026. The business record behind that gain is faster revenue, next-generation security ARR and backlog growth, enlarged by the Chronosphere and CyberArk acquisitions. Those developments do not explain every trade, but they show what investors are underwriting.

The company changed shape early in the year. Palo Alto Networks, Inc. (NASDAQ: PANW) closed the $2.951 billion Chronosphere acquisition on January 29, adding observability, then completed the $21.061 billion CyberArk acquisition on February 11, adding identity security.

The acquisitions arrived alongside operating acceleration. Fiscal third-quarter revenue rose 31% to $3.002 billion and NGS ARR rose 60% to $8.1 billion. Fiscal fourth-quarter revenue then rose 34% to $3.410 billion, while NGS ARR reached $9.1 billion and remaining performance obligations reached $21.2 billion.

Palo Alto Networks, Inc. (NASDAQ: PANW) finished fiscal 2026 with $11.480 billion of revenue, up 24.5%. Subscription and support supplied $9.2 billion, or 80.1%, of the total. That recurring base and the contracted backlog are the strongest evidence behind the platform thesis.

Read more: Palo Alto Networks (PANW) stock analysis and investment case

The move in numbers

The price calculation uses the same common stock and U.S. dollars at both endpoints. One hundred multiplied by $380.55 divided by $184.20 minus one equals 106.5961%. Yahoo matched both closes within a fraction of a cent and reported no split or dividend event during the window.

Reported growth needs a second calculation. The fiscal 2026 Form 10-K says Chronosphere and CyberArk contributed $930 million of revenue after their close dates. That equals 8.1% of the year's $11.480 billion total. The same acquired operations produced a combined post-close operating loss of $797 million.

The fiscal third quarter offers the cleanest bridge. Palo Alto Networks, Inc. (NASDAQ: PANW) disclosed that $388 million of $3.002 billion in revenue came from the two acquisitions, a 12.9% share. Removing that amount leaves $2.614 billion, about 14.2% above the prior-year quarter's $2.289 billion. That approximation is not the company's organic-growth metric, but it keeps acquired revenue from being mistaken for entirely underlying growth.

CyberArk and Chronosphere also supplied $1.6 billion, or 19.8%, of fiscal third-quarter NGS ARR and $1.8 billion of remaining performance obligations. The contribution came with a large purchase price and integration work.

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How the business works

Palo Alto Networks, Inc. (NASDAQ: PANW) sells hardware, subscriptions and support across network security, cloud security, security operations, AI security, identity and observability. Hardware can open an account, but subscriptions and support carry most of the economics. Revenue is recognized over contract terms, while NGS ARR annualizes active next-generation contracts and remaining performance obligations show contracted revenue not yet recognized.

The platform strategy asks customers to replace separate tools with fewer integrated Palo Alto Networks, Inc. (NASDAQ: PANW) platforms. That can increase wallet share and reduce customer complexity, while making one vendor responsible for more of the security stack.

Competition comes from different directions. Microsoft Corporation (NASDAQ: MSFT) can bundle security with cloud and productivity software, while CrowdStrike Holdings, Inc. Class A (NASDAQ: CRWD) competes from cloud endpoint and security operations. Palo Alto Networks, Inc. (NASDAQ: PANW) is positioned as the broad independent platform, but its own filing warns that large vendors can bundle products, offer lower pricing and use larger installed bases.

The model still throws off cash. Fiscal 2026 operating cash flow was $4.553 billion and adjusted free cash flow was about $4.41 billion, a 38.4% margin. The company ended July with $7.906 billion of cash, equivalents and investments. Those figures give management room to integrate acquisitions, but adjusted free cash flow excludes qualifying acquisition and other payments and should not be read as GAAP profit.

Why the case is still difficult

The strongest counterargument is that the growth and the profit measures moved in opposite directions. Fiscal 2026 GAAP operating income fell 44.1% to $695 million and net income fell 72.9% to $307 million. The fourth quarter produced a $282 million GAAP net loss even as adjusted free cash flow reached $1.3 billion.

Acquisition accounting explains part of the gap. Palo Alto Networks, Inc. (NASDAQ: PANW) recorded $1.815 billion of share-based compensation, equal to 15.8% of revenue and up 39.6%. It also reported $562 million of post-acquisition net losses from CyberArk convertible notes and related capped calls.

Dilution is the other binding financial relationship. CyberArk consideration included 112 million Palo Alto Networks, Inc. (NASDAQ: PANW) shares valued at $18.488 billion. Fiscal 2026 weighted-average basic shares rose 13.0% to 749 million, and 818 million shares were outstanding on August 31. Revenue and cash flow can grow while each existing share owns a smaller fraction of the business.

The acquisitions also left $14.8 billion of CyberArk goodwill and $2.364 billion of Chronosphere goodwill on the balance sheet. Those balances reflect expected synergies rather than cash that can be recovered directly. The case weakens if cross-selling stalls, integration costs persist, or customers choose bundled alternatives from Microsoft Corporation (NASDAQ: MSFT) or focused offerings from CrowdStrike Holdings, Inc. Class A (NASDAQ: CRWD).

What's next

The next report should be judged against fiscal first-quarter 2027 guidance. Palo Alto Networks, Inc. (NASDAQ: PANW) expects $3.300 billion to $3.310 billion of revenue, $9.54 billion to $9.56 billion of NGS ARR and $20.8 billion to $20.9 billion of remaining performance obligations. An official report date had not been announced as of October 24.

Watch the acquired-versus-underlying growth bridge, GAAP operating income, adjusted free cash flow, share count and evidence that identity and observability are increasing customer spend. Fiscal 2027 guidance calls for 23% to 24% revenue growth but 22% to 23% NGS ARR growth, a sharp step down from the acquisition-boosted fiscal 2026 exit rate.

Palo Alto Networks, Inc. (NASDAQ: PANW) has stronger scale and cash generation than the share-price chart alone can show. The 106.6% gain does not prove the stock is cheap, identify why every trade occurred or include dividend reinvestment. The next evidence must show that platform growth survives after the acquisition comparisons normalize and that the cash economics reach common shareholders despite integration costs and dilution.

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