Palo Alto Networks shares dropped about 8% after the cybersecurity company lowered its annual profit forecast due to rising costs tied to recent acquisitions.
The firm has been expanding aggressively to position itself as an integrated security platform in response to increasingly complex AI-driven cyber threats. However, the financial burden of its recent deals, including the $25 billion acquisition of CyberArk and the purchase of Chronosphere, is now affecting near-term profitability.
Integration expenses have climbed sharply, with Palo Alto expecting a $2.3 billion cash outlay related to CyberArk in the fiscal third quarter. The company has also acquired Israeli startup Koi as part of its strategy to enhance AI-focused security capabilities.
Despite the pressure on margins, Palo Alto continues to push forward with its unified security architecture, aiming to deliver faster, automated protection across networks, applications and cloud environments.
Analysts say the recent acquisitions strengthen the company’s long-term platform strategy by placing identity security at the center of its offering and improving visibility across AI-driven systems.
Palo Alto now forecasts adjusted earnings per share between $3.65 and $3.70 for fiscal 2026, down from earlier expectations of $3.80 to $3.90. At the same time, it raised its revenue outlook to between $11.28 billion and $11.31 billion.
