Palo Alto Networks shares slid 10.27% to $324.92 on Wednesday, a sharp reversal for a stock that had rallied into its fiscal fourth-quarter report. The drop came a day after the company posted results that beat Wall Street on both the top and bottom lines, underscoring how much good news was already priced in before Tuesday's after-the-bell release.
The quarter itself was strong by the numbers: adjusted earnings of $1.02 per share cleared the $0.98 estimate, a 7.37 percent increase from the $0.95 posted a year earlier, while revenue of $3.41 billion beat the $3.352 billion consensus and marked 34% year-over-year growth. Next-generation security annual recurring revenue jumped 63% year over year, and the company closed the year with remaining performance obligations surpassing $20 billion for the first time. Guidance also came in ahead of expectations, with fiscal 2027 adjusted EPS guided to $4.16-$4.19 versus a $4.11 estimate and sales guided to $14.100 billion-$14.200 billion versus $13.788 billion expected; first-quarter guidance of $0.96-$0.98 in adjusted EPS and $3.300 billion-$3.310 billion in sales also topped Street estimates.
Alongside the print, Palo Alto announced it had acquired Console, an AI-native platform designed to bring agentic capabilities into its Cortex security suite, with financial terms undisclosed. Chairman and CEO Nikesh Arora framed the broader opportunity around what he described as a roughly $1 trillion gap in AI security spending, arguing that legacy systems aren't built to handle attacks that move at AI speed. One Yahoo Finance report attributed the stock's slide to investors taking profits after Dell's own strong quarter dominated the day's AI-earnings narrative.
The selloff comes against a backdrop of a stock that had already climbed 6.53% over the prior five trading days and sat close to its 52-week high of $398.88, reached at some point in the past year, versus a 52-week low of $139.57. Palo Alto also flagged a decline in gross margin and pointed to what it called a more normalized growth trajectory heading into fiscal 2027, a shift worth watching as the next-generation security business continues to scale against tougher year-ago comparisons.