Key Points
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Palo Alto Networks protects its clients from cyberthreats.
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It has grown robustly over the years and is poised to continue doing so.
If you like to follow the stock market and keep up with booming industries, you’re probably aware of Palo Alto Networks (NASDAQ: PANW), a leader in the cybersecurity realm. You might even be wishing you had invested in it years ago. To give you an idea of how the stock has performed, if you’d invested in it five years ago with just $100, you’d now have a position worth $255 (as of Feb. 13).
If you’d invested $10,000, your stake would be worth $25,475. Both of those gains reflect annualized average returns of 20.6% for Palo Alto Networks, versus a still-respectable 12.6% gain for the S&P 500 index over the same period.
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Some people in an office hallway are raising arms in celebration.
Image source: Getty Images.
All this is looking back, though. As an investor, it’s far more important to look forward. Yes, you may have missed out on an impressive gain, but where does the stock seem to be headed next? If it still seems to have growth potential, as this stock does, and its stock doesn’t seem overvalued, as this one doesn’t, you might still buy into it and do well.
Palo Alto Networks has recently been transitioning customers to a simplified set of platforms that are powered by artificial intelligence (AI). Its subscription-based services should delight investors, as they provide the company with dependable recurring revenue.
In its fiscal 2025, which ended July 31, 2025, revenue grew by 15% year over year, and management is projecting 14% growth in the current fiscal year. At the time of its fourth-quarter report, CEO Nikesh Arora noted, “Our strong execution in Q4 reflects a fundamental market shift in which customers understand that a fragmented defense is no defense at all against modern threats. They are partnering with us because our platforms are designed to work in concert, creating powerful operational synergies that deliver superior, near real-time outcomes and the efficiency our customers need.”
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Best of all, the stock seems reasonably valued at a forward price-to-earnings ratio of 49, a bit below its five-year average of 54. The need for cybersecurity services seems likely to keep growing, which is promising for Palo Alto Networks and other great cybersecurity stocks.
Should you buy stock in Palo Alto Networks right now?
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Selena Maranjian has positions in Palo Alto Networks. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.