This Unstoppable Stock Is Obliterating the S&P 500 and the Nasdaq-100 in 2026, but Is There Still Time to Buy?

Key Points Palo Alto Networks is the world's largest cybersecurity company, and its stock has exploded higher by 78% so far in 2026. Palo Alto has an expanding portfolio of products designed to protect enterprises from the significant threats posed by artificial intelligence. Palo Alto stock is trading at a rich valuation, which could limit further upside from here. 10 stocks we like better than Palo Alto Networks › Palo Alto Networks (NASDAQ: PANW) is the world's largest cybersecurity company. Its stock has exploded by 78% in 2026 (as of the market close on Wednesday, Sept. 2), so it's obliterating the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq-100 indexes, which have returned 12% and 15.4%, respectively. Businesses are deploying artificial intelligence (AI) software at a rapid pace, leaving their sensitive data and valuable digital assets vulnerable to cyber attacks. Plus, hackers are using AI themselves to uncover holes in corporate defenses. These challenges call for highly advanced cybersecurity solutions, and that's exactly what Palo Alto Networks provides for its enterprise customers. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » But here's why investors might want to think twice about buying Palo Alto stock following its blistering gain this year. Image source: Getty Images. Cybersecurity for the AI era AI agents can be configured to autonomously complete tasks without the need for further prompts from their human supervisors. This is a game-changer for productivity within the enterprise, but it also creates substantial risks because agents are constantly roaming through networks, data, and applications to complete their assigned tasks, often with minimal oversight. Moreover, businesses are building agents and other AI software by using a range of different open-source models, which they pair with their internal data to achieve the best results. Willingly plugging sensitive information into any third-party application immediately leaves the enterprise vulnerable to a breach. Simply put, many of the potential risks posed by AI are entirely self-inflicted, so Palo Alto is working hard to make sure enterprises can protect themselves. The company's Prisma AIRS platform, for example, monitors every AI agent's actions in real time, while continuously scanning third-party models for vulnerabilities. It basically serves as a gateway for all AI-related traffic, ensuring that malicious applications don't infiltrate the enterprise. Prisma AIRS surpassed $100 million in annual recurring revenue during Palo Alto's fiscal 2026 fourth quarter (ended July 31), a mere 12 months after it launched, making it the fastest-growing product in the company's history. But external threats still require significant attention. Earlier this year, Palo Alto's Unit 42 division demonstrated how an AI-driven attack can breach a corporate network in under 30 minutes, which is where the company's Cortex XSIAM product comes in. It's an AI-powered security operations platform that automates threat detection and incident remediation processes. It reduces the average customer's median time to respond to under 10 minutes, from days or even weeks previously. Accelerating revenue growth A unified approach to cybersecurity is essential in the AI era. Products have to work together seamlessly and in real time to minimize vulnerabilities. This is driving a shift toward "platformization," which involves enterprises consolidating all of their cybersecurity spending with one vendor, and Palo Alto is quickly becoming one of the industry's top choices. Palo Alto generated $3.41 billion in total revenue during the fiscal 2026 fourth quarter, a 34% increase from the year-ago period. That growth rate marked an acceleration from 31% in the third quarter just three months earlier, and platformizations were a key source of the momentum. At the end of the quarter, Palo Alto had 2,500 platformed customers, which was a whopping 78% jump from the year-ago period. Plus, those customers had a net revenue retention rate of over 120%, meaning they had increased their spending by 20% compared to the same quarter last year. Platformized customers are also the biggest buyers of Palo Alto's next-generation security (NGS) portfolio, which includes AI products like Prisma AIRS and XSIAM. ARR from the NGS portfolio soared by 63% year over year to $9 billion during the fourth quarter, but Palo Alto believes it can grow that figure to $20 billion from 4,000 platformized customers by fiscal 2030. Palo Alto's valuation could limit further gains for shareholders Following its blistering gains in 2026, Palo Alto stock now trades at a price-to-sales (P/S) ratio of 21.7, which is twice its average dating back to its initial public offering (IPO) in 2012. PANW PS Ratio data by YCharts Moreover, Palo Alto is now 3.5 times as expensive as the Nasdaq-100 index, which has a P/S ratio of 6.1. In other words, it looks significantly overvalued compared to a basket of America's top technology companies. Although Palo Alto has significant long-term growth potential based on management's fiscal 2030 forecast for platformizations and NGS ARR, investors are pricing in a lot of that growth right now, leaving very little room for further upside in its stock over the next few years. As a result, investors might want to wait for a pullback before jumping in -- if its P/S ratio falls back in line with its long-term average, that might be a good buying opportunity. Should you buy stock in Palo Alto Networks right now? Before you buy stock in Palo Alto Networks, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palo Alto Networks wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $446,157 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,377,357 !* Now, it’s worth noting Stock Advisor’s total average return is 983 % — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of September 4, 2026. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy .

Palo Alto Networks is the world's largest cybersecurity company, and its stock has exploded higher by 78% so far in 2026.

Palo Alto has an expanding portfolio of products designed to protect enterprises from the significant threats posed by artificial intelligence.

Palo Alto stock is trading at a rich valuation, which could limit further upside from here.

Palo Alto Networks (NASDAQ: PANW) is the world's largest cybersecurity company. Its stock has exploded by 78% in 2026 (as of the market close on Wednesday, Sept. 2), so it's obliterating the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq-100 indexes, which have returned 12% and 15.4%, respectively.

Businesses are deploying artificial intelligence (AI) software at a rapid pace, leaving their sensitive data and valuable digital assets vulnerable to cyber attacks. Plus, hackers are using AI themselves to uncover holes in corporate defenses. These challenges call for highly advanced cybersecurity solutions, and that's exactly what Palo Alto Networks provides for its enterprise customers.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

But here's why investors might want to think twice about buying Palo Alto stock following its blistering gain this year.