PANW vs. NET: Which Cybersecurity Stock Should You Buy Right Now? - Yahoo Finance
Palo Alto Networks (PANW) and Cloudflare (NET) are leading cybersecurity firms, but PANW currently offers a more favorable investment outlook with stronger growth prospects.
Palo Alto Networks and Cloudflare are both at the forefront of cybersecurity, protecting organizations from extensive cyberattacks including credential theft and social engineering strikes. While Cloudflare offers a cloud-native platform spanning network security and application security, Palo Alto focuses on next-generation firewalls, cloud security, and AI-driven threat detection.
Palo Alto's Growth
Palo Alto Networks remains a cybersecurity leader with innovative products and a strong customer base. The company's SASE (Secure Access Service Edge) bookings grew 40% in fiscal 2026, supported by growth across Access, SD-WAN, and secure browser solutions. PANW displaced legacy vendors in nearly 100 customer accounts, representing over $400 million in total contract value—nearly double the prior year.
This makes platform standardization a simpler choice for customers.
Margin Concerns
However, PANW faces margin pressures as its non-GAAP gross margin fell 100 basis points year over year to 74.8% in Q4 fiscal 2026, while the full year declined 60 basis points to 75.8%. The decline stems from the growing mix of SaaS offerings, which are still scaling toward mature margin levels. Management expects cloud hosting costs to grow faster than revenues in fiscal 2027, potentially weighing on gross-margin expansion.
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