What Happened?
A number of stocks jumped in the morning session after market concerns regarding artificial intelligence disruption subsided and enterprise investment highlighted AI as a business growth enabler across the software industry. According to CNBC, software stocks roared back in the third quarter as fears that artificial intelligence would disrupt traditional business models faded. The iShares Expanded Tech-Software Sector ETF rose 17% in the quarter, and cybersecurity stayed a bright spot, with CrowdStrike up 39% as more powerful AI reinforced the need to protect companies.
CNBC has also reported that CrowdStrike and Palo Alto Networks rose 95% and 113% from April through June, their best quarter on record, as autonomous AI agents fueled demand for cybersecurity.
Peer commentary reinforced that on Tuesday. Zscaler reaffirmed its fiscal 2027 annual recurring revenue target of $4.396 billion to $4.426 billion and its longer-term goal of $10 billion in ARR. Chief Executive Officer Jay Chaudhry told CNBC’s Squawk Box the company is still seeing that demand as enterprises secure AI.
CrowdStrike, meanwhile, expanded its Global Cybersecurity Startup Accelerator with Amazon Web Services and NVIDIA to build security tools for agentic AI. Chief Executive Officer George Kurtz told Squawk Box that AI safety concerns are a solvable problem and discussed the accelerator on the same program.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Project Management Software company monday.com (NASDAQ:MNDY) jumped 2.9%. Is now the time to buy monday.com? Access our full analysis report here, it’s free.
- Endpoint Security company CrowdStrike (NASDAQ:CRWD) jumped 3.4%. Is now the time to buy CrowdStrike? Access our full analysis report here, it’s free.
- Project Management Software company Asana (NYSE:ASAN) jumped 2.1%. Is now the time to buy Asana? Access our full analysis report here, it’s free.
- Data Infrastructure company C3.ai (NYSE:AI) jumped 2.6%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free.
- Network Security company Palo Alto Networks (NASDAQ:PANW) jumped 4%. Is now the time to buy Palo Alto Networks? Access our full analysis report here, it’s free.
Zooming In On Palo Alto Networks (PANW)
Palo Alto Networks’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 5.1% on the news that BTIG raised its price target on the cybersecurity provider to $425 from $404 and reiterated a Buy rating following discussions with management. BTIG analyst Gray Powell cited growth potential from Chronosphere, CyberArk, and Prisma AIRS, forecasting pro forma revenue growth above 17%. In addition, NVIDIA launched its Open Agent Safety Platform to govern and secure artificial intelligence agents across compute systems from testing to deployment. NVIDIA named Palo Alto Networks as one of the industry leaders collaborating on the safety initiative.
Palo Alto Networks is up 133% since the beginning of the year, and at $418.23 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Palo Alto Networks’s shares 5 years ago would now be looking at an investment worth $5,162.
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