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Palo Alto Up 11% in a Month: What's Next for Investors?

Palo Alto Networks, Inc. (NASDAQ: PANW) shares have risen 10.7% over the past month, outperforming the Zacks Internet - Software industry's growth of 5.2% and the broader Zacks Computer & Technology sector's return of 7.9%. The upswing was primarily driven by positive demand signals from other cybersecurity companies, including Zscaler Inc. and CrowdStrike Holdings, Inc. (NASDAQ: CRWD). As reported on May 30, Zscaler's third-quarter fiscal 2024 revenues increased 32% year over year, while non-GAAP earnings soared 83%. CrowdStrike reported its first-quarter fiscal 2025 results on Jun 4, wherein revenues jumped 33%, while non-GAAP earnings rose 63%. The latest quarterly results from Zscaler and CrowdStrike suggest that the demand environment for cybersecurity players is still strong. However, Palo Alto's slowing sales and earnings growth remains a major concern. One-Month Price Performance Image Source: Zacks Investment Research What's Hurting PANW's Top-Line Growth? Over the past year, Palo Alto has reported decelerated growth in revenues, billings and adjusted earnings. It has blamed uncertain macroeconomic conditions as the main reason behind this deceleration. However, the cybersecurity industry is highly competitive, with each player continuously innovating and vying for market share. To address these threats, Palo Alto is aiming to consolidate its customer base into a unified security platform, reducing reliance on smaller cybersecurity firms for specific services. The strategy would have long-term ...